Increasing confidence, debt reduction on track

Springfield’s half year trading update (six months to Nov ’23) confirms an in-line performance for H1 and reiterates full year expectations. After a challenging period for the sector, it is a reassuring update, pointing to subdued but stable conditions in Private housing, increasing activity within Affordable housing and clear progress with the Board’s debt reduction strategy.

Recent indicators suggest that the market may be stabilising (notably mortgage approvals ticking up in October as interest rates appear to have peaked) giving us confidence to introduce FY25 forecasts within this note.

Springfield’s shares have recovered somewhat over recent weeks, alongside sector peers, but still trade on just 9x P/E and 0.5x P/Book for FY25. With increasing visibility of profit recovery and cash generation, we increase our ED Fair Value to 130p (from 110p) based on a sector average Price/ Book multiple of 1.0x.