LSL Property Services — Strategic transformation bearing fruit

LSL Property Services (LSE: LSL)

Last close As at 29/03/2025

GBP2.77

2.00 (0.73%)

Market capitalisation

GBP287m

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Research: Real Estate

LSL Property Services — Strategic transformation bearing fruit

LSL Property Services (LSL) has published its preliminary results for the year ended December 2024. On a like-for-like basis these show strong growth in revenue and earnings, reflecting the success of the strategic transformation of the group over the past two years. This has created a simpler group structure, with structurally higher margins, better able to deliver more consistent performance across market cycles. The company expects to deliver further earnings growth in the current year.

Martyn King

Written by

Martyn King

Director, Financials

Real estate

QuickView

27 March 2025

Price 263.00p
Market cap £272m
Price Performance
Share details
Code LSL
Listing LSE

Shares in issue

103.5m

Net cash as at 31 December 2024

£32.4m

Business description

LSL is a leading provider of financial services, surveying and valuation and estate agency franchising services.

Bull points

  • Leading market positions.
  • Capital light model.
  • Scalable platform.

Bear points

  • Residential property market vulnerable to economic uncertainties.
  • Regulatory changes can be burdensome.
  • Relatively low share trading liquidity.

Analyst

Martyn King
+44 (0)20 3077 5700

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FY24 results

On a continuing basis, group revenue increased 20% to £173.2m (2023: £144.4m) and was up by 23% on an underlying basis. Operating profit showed an almost threefold increase to £27.7m (2023: £10.3m), with all divisions reporting increased profitability. The operating margin of 16% (2023: 7%) was at a 15-year high. Surveying and valuation revenues increased 36% to £97.8m, driven by contract wins and an improvement in market activity. The underlying operating margin increased to 23.0% (2023: 9.4%) and underlying operating profit increased to £22.5m (2023: £6.7m). Financial services made good operational and strategic progress, with an increased underlying operating profit of £8.7m (2023: £7.4m). Earnings grew despite a 6% decline in revenues, the net impact of disposals and the acquisition of TenetLime in February 2024. The strength of the real estate franchising model was reflected in a 29% increase in revenues to £27.0m, with underlying operating profit up 77% to £7.6m (28.0% margin).

Strong cash flow

LSL’s high-margin and low-capital-intensity model is highly cash generative and in 2024 the cash flow conversion rate was 114% of operating profit. The year-end net cash position was £32.4m. Strong cash flow supports organic and inorganic investment to grow the business and further enhance efficiency, along with dividends and share repurchases. The unchanged 2024 DPS was 11.4p and was 1.85x covered by adjusted EPS of 21.1p. The group has a well-articulated capital allocation policy and has initially allocated £7.0m to share repurchases, of which £1.5m has been deployed to date.

Outlook and valuation

Management says that trading has been line with its expectations in the opening months of 2025, and a further increase in profits is expected. The shares are trading at a headline 10.5x FY25e consensus EPS, falling to 9.0x FY26e without adjustment for the surplus cash (more than 10% of market cap). The dividend yield is 4.3%.

Source: LSEG Data & Analytics as at 26 March 2025, LSL. Note:2023 data is on a continuing basis. .

Consensus estimates

Year end Revenue (£m) EBIT (£m) PBT (£m) EPS (p) DPS (p) P/E (x) Yield (%)
12/23 144.4 10.3 4.9 7.60 11.40 34.6 4.3
12/24 173.2 27.7 23.0 21.10 11.40 12.5 4.3
12/25e 189.4 32.7 33.8 25.04 11.40 10.5 4.3
12/26e 204.8 38.6 39.6 29.32 11.60 9.0 4.4

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