McInerney investors’ dividend boost

INVESTORS in McInerney Holdings plc who have seen the value of their shares increase by 64% this year received a dividend boost yesterday when the company announced a 17% increase in pre-tax profits.

McInerney’s pre-tax profits for the first six months of the year rose by 17% to 8.53m from 7.30m a year earlier, the company said.

Managing director of the home building company Barry O’Connor said the payment for the first time of an interim dividend of 5 cents will be matched in the second half of the year and will compare very favourably with the total dividend of 6.25 cents for all of 2002.

Mr O’Connor said that in line with it’s peers operating in the British market the company plans to increase its dividend, initially to 15% of earnings, heading towards 20%.

The company has completed 355 sales in Ireland so far this year and plans to top the 1,000 sales mark in 2003 while 181 houses were sold in Britain.

Mr O’Connor said the company expects to grow organically in Ireland but plans further acquisitions in the North of England to compliment its existing presence in the Liverpool/Manchester corridor where there is a market of eight million people.

Mr O’Connor said Britain will be the main driver of growth in the coming years where McInerney plans to develop a business as big as its Irish operations within two to three years.

Davy analyst Florence O’Donoghue is very upbeat about the shares and while pointing up the share price gains so far this year she noted: “The stock’s discount to the sector is now 20% both on a 2003 and 2004 price to forecast earnings. This is unwarranted in our view. We think the stock, in the first instance, deserves a sector rating. A forward P/E in line with the sector values the stock at 435c. This implies 23% upside from the current price.”

Ms O’Donoghue said McInerney delivered a good set of interim numbers that were ahead of Davy’s expectations and said reflecting the strong results they are upgrading their full year forecasts.

“We are upgrading our EPS forecasts for the year to be around 64c, compared to 55c earlier,” she added.