Foxtons - where do we go from here

Monday, 30th July 2018 09:22 - by Rajan Dhall

This company have not been on the exchange for too long and the chart below represents the share price from IPO to the weekly close on Friday. The London property market is going through a slowdown at the moment and it seems that Foxtons has been taking the brunt of that slowdown.

·    Group revenue declined by 9% as a resilient lettings performance was offset by ongoing weakness in the London sales market.
·     Adjusted EBITDA £0.1m (2017: £7.1m). Loss before tax £2.5m (2017: Profit before tax £3.8m).
·    Decline in profitability was driven by lower revenue in the sales business and additional planned investments in people, brand and technology.
·     The lettings business continues to demonstrate resilience, with revenue of£31.7m down 1% versus prior year and with improving Q2 performance. 
·      Sales revenue was £17.2m, down 23%, reflecting continued market weakness due to lower sales transactions.
·      Alexander Hall mortgage revenue £4.1m, down 3%. A solid performance driven by re-mortgages.

·      Strong balance sheet maintained with no debt and cash balance of £11.8m at 30 June 2018.

·      There will be no interim dividend in this financial period in line with our policy.

 The CEO Nic Budden commented ''The property sales market in London is undergoing a sustained period of very low activity levels with longer and less visible transaction outcomes, which clearly impacts our business. We continue, however, to achieve market leading share of listings giving us confidence that our service led, results based model remains highly relevant to consumers. Going forward we will continue to invest in our proposition to enable us to maintain our differentiation in the minds of buyers, sellers, landlords and tenants.''

The market clearly feels the Co. are in trouble as do I, but the company must act and focus on billings in the rental sector. The London property market is not going away and Foxtons have had their fair share of joy in the past. One key thing to consider about Foxtons is how low is too low, when does the share price represent good value to a longer-term property sector investor, this is a solid business with good infrastructure and great fundamentals lets hope they can ride this storm to reach new heights. 

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.