An undervalued, high quality growth story

Springfield Properties is one of Scotland’s leading housebuilders. It has an enviable track record of growth and profitability and a reputation for building high quality homes in attractive locations. Whilst market headwinds have increased, in our view the 50% decline in Springfield’s share price over the past year is significantly overdone. The business has navigated previous cyclical downturns impressively and has emerged strongly from them.

We initiate coverage with confidence in the Group’s long term growth prospects and see scope for a material re-rating of the shares as investor sentiment improves. 

Whilst sector commentary is likely to remain cautious in the near term, we expect investor sentiment to improve once there are clear signs that inflation is easing and interest rate rises are coming to an end. We initiate coverage with a Fair Value per share of 110p, which is based on a sector multiple of 0.9x Price/ Book. This represents a level c.70% above the current share price.