Goodbody up share prices of Sherry Fitzgerald

PRE-TAX profits at real estate company Sherry Fitzgerald leaped by 63% in the first six months of the year prompting Goodbody Stockbrokers to up their target shares price for the company by 40%.

Goodbody analyst Peter Horgan rates the share a buy with a €1.40 price target, the shares opened at €1 yesterday and closed at the same price. Goodbody are brokers to the auctioneering house.

“Sherry Fitzgerald reported a strong set of interim results to the end of June 2002. Adjusted EPS was 19.7c, 25% ahead of our forecast and up 67% on the same period last year.

“The main driver of this performance was fee income in the new homes sector, which increased by 106% to €5.25m.

“This reflects the renewed strength of first-time buyer and investor demand in the first half of the year after the re-introduction of mortgage interest relief for investors in budget 2002,” stated Mr Horgan.

Davy Stockbrokers analyst Florence O’Donoghue said the results were ahead of their expectations.

“With a promising outlook for the second half, we expect to upgrade our full year forecasts,” the Davy analyst added.

Sherry Fitzgerald chairman Donal Chambers was very pleased with the level of debt reduction achieved by the company.

“The debt equity ratio has been reduced further to 9% from a high of 64% in June 2000. In monetary terms this equates to a reduction in debt from €6.5 million to €1.5 million on 30 June 2002.”

Commenting on the results Sherry FitzGerald Group plc chief executive Mark FitzGerald said: “These are strong results for the first six months of 2002, reflecting restored confidence and demand in the residential property market and in particular a notable increase in turnover in the new homes market from both private buyers and investors.”

“The Group has strengthened considerably, reporting a significant reduction in the debt equity ratio and improved earnings, reaping benefits from the expansion of our franchise model and continued operating efficiencies from our investment in MyHome.ie. Our focused strategy of national expansion and development of additional income streams vertically through the branded network continues apace.”

“Trading levels during the summer moderated somewhat reflecting seasonal factors.

“Activity across all business units is strong and the outlook for the second half of 2002 is positive”.

Mr Fitzgerald said that by Christmas 2003 they hoped to have 100 branches in place which Mr FitzGerald believes is the optimum for the company in Ireland. Monaghan is the only county in the State where the group do not have a presence.

The company is to create a nationwide mortgage brokerage service with Dublin-based Simply Mortgages Ltd.

The new brokerage - called Sherry FitzGerald Finance - will be managed by Simply Mortgages Ltd.