(SVS) Savills

Good to see this getting back up to where it was

Only a matter of time.....

RT.

Asian arm keeps Savills insulated from economic chill
The housing market is in decline, the financial markets are once again flirting with paralysis and international economies are labouring under the weight of their massive debts.
11:59PM BST 18 Aug 2011
http://www.telegraph.co.uk/finance/8710451/Asian-arm-keeps-Savills-insulated-from-economic-chill.html

314.1p +1.6p
Questor says Buy
But Savills is doing fine. Yesterday’s results revealed a company that was in good shape. Protected by its Asian operation and the gravity-defying ability of prime residential to survive the economic crises crippling the rest of the market, Savills continues to thrive.
It raised its interim dividend by 5pc yesterday and revealed a healthy balance sheet with £26m of cash in the bank. The yield is 2.9pc, not generous but not bad for property companies. On top of this the company revealed healthy growth in both top and bottom lines. Revenue was up 10pc to £335.8m, profit was up 39pc to £20m.

Shares rose after yesterday’s results, but after losing a quarter of their value in the last three months you would hope so. Like much of the property and the wider market Savills’ shares have been on a rollercoaster ride in recent months. They peaked at 430p in May, slumped to 310p earlier this month and have been bumping along at around that price since then.
The story the company is trying to put across to the market is that it is well-insulated against problems in any one territory. Its Asian business is now almost as big as the UK operation. The company is also benefiting from steady cash flow provided by its £3bn fund management arm, typically far more secure income than that provided by advising on transactions.
By focusing on the prime markets overseas as well as at home the company has avoided the worst affects of the global economic problems.
Investors need to consider two questions before investing in Savills.
Firstly, will the prime property market continue to defy gravity? Savills contends the market’s fundamentals are not good. Supply remains restricted and overseas buyers are still queuing up.
The reliance on overseas buyers has been highlighted before but it is concerning. Usually the average for Savills is 50pc of buyers being from overseas, but in recent months this has increased to above 65pc. These buyers have always been part of the London market but then there has also always been the feeling the money is not wedded to London and could flow elsewhere if conditions change.
The other question is how changes in the global economy will affect the company. After all, the company cannot be bomb-proof forever. The answers are linked. As the global economy deteriorates – as Questor believes it will over the short term – there will be a flight to safety. Gold is the obvious answer but high quality property is another. The problem is this could produce a property bubble of its own.
We won’t know for some time how these factors will play out. Savills is one of those companies that can suffer from volatility in the market as traders run hot and cold on property. But for those investors prepared to weather those changes there is a good case to invest in Savills and its current management.
It comes with a caution, but Questor says buy.

Investment Column: Update shows why Savills is hot property
http://www.independent.co.uk/news/business/sharewatch/investment-column-update-shows-why-savills-is-hot-property-2340252.html

Edited by Nikhil Kumar
Friday, 19 August 2011
Our view: Buy

Share price: 314.1p (+1.6p)

Investing in property-related stocks is tricky – at least in the short to medium term. Large chunks of the London-listed sector are hostage to the domestic housing market, which looks sluggish, to put it mildly.

But there are exceptions, and Savills is one of their number. The last time we looked at the company, we opted to buy, reasoning that its international reach, coupled with exposure to the resilient upper end of the UK market, gave it an edge.

Yesterday's half-yearly results confirmed our confidence. The group said revenues in the six months to the end of June had climbed by 10 per cent, with pre-tax profits surging by nearly 40 per cent, as it drew strength from activity in the prime central London property segment and from the Asia-Pacific region, which remains buoyant. Greater China was particularly strong, according to the company.

Yes, there has been some slowing of in activity in the mainstream markets in Hong Kong and mainland China, the result of Government efforts to cool activity. But Savills remains on an even keel, thanks to its position in the prime residential market.

Savills's focus on the upper end should continue holding it in good stead, even if there are some minor bumps along the way.

Moreover, the exposure to high-end London properties inspires confidence, given the prevailing concerns about global growth. As Savills itself noted, "prime London residential markets have been seen as a haven for the world's investors".

All in all, the update was reassuring, both for us, and indeed for the markets. Just look at the share price. Savills managed to rise – yes, rise – despite the falls seen elsewhere.

Also reassuring is the fact that, despite showing resilience, Savills trades on multiples of around 11.6 times forward earnings for this year, and on under 10 times on the estimates of next year, according to UBS. At the same time, it boasts dividend yields of more than 4 per cent.