Telford Homes

HOLD

01/08/2008 James Crux

Directors have recently been buying shares in Telford Homes, the residential developer focused on East London, whose shares have slumped on worries regarding the wider housing market.

Whilst understandable given prevailing investor sentiment towards the property sector, the de-rating of the shares – trading north of 400p earlier last year – ignores the fact that the company operates in a part of London undergoing regeneration ahead of the Olympics and where a large amount of committed spend is headed. Telford, renowned in the market for its regeneration projects, is also well positioned to capitalise on its strong links with affordable housing providers. Moreover, the company claims a more robust business model than most, with the business de-risked through the pre-selling of homes.

In a recent update chief executive Andrew Wiseman, keen to keep a tight reign on cash and flagging up strong support from the group’s banks, said the company had continued to complete apartment sales in a worsening market, albeit at a slower rate.

Telford also has a strong recent track record, having served up a 31% pre-tax profit increase to £17.7m from turnover lifted almost 55% to £160.4m for the year to March – the total dividend was increased from 8.9p to 10p per share.

Though this sector lacks appeal at present, shares in Telford, recommended on these pages at 138.5p in 2005, are not for selling at current lowly levels.

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