Two property franchise specialists released full year updates this week: Property Franchise (LON:TPFG) and Belvoir (LON:BLV). I am interested in this business model because of its recurring revenues, strong cash generation, low capex and franchise networks.
I hold a small position in TPFG but it is Belvoir that has wowed the market with revenue growth of some 43% year-on-year. Belvoir is also significantly cheaper, trading at just c11 times forecast earnings and paying out a forecast yield of 4.73%. By comparison, TPFG is on 15 times forecast earnings and is set to pay out a 3.8% dividend.
Have I backed the wrong horse here?
The Property Franchise Group
Market cap: £59.39m
Revenue: £11.14m
Forecast PE ratio: 15x
Here are the headline figures from TPFG’s full year trading update, released on 28 January:
In line with market expectationsMuch of the impact of the tenant fee has now been mitigatedRecord performance for lettings revenueOverall revenue +1.79% to £11.4mManagement service fees +2.12% to £9.6mNumber of tenanted managed properties serviced +5.45% to c.58,000Net cash now up to £4mThe outlook also sounds quite sunny:
“Early indications of improving market conditions underpin our expectation that the volume of house sales…
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