Cairn Homes — Underlying demand supports confident outlook

Cairn Homes (LSE: CRN)

Last close As at 03/03/2025

GBP1.78

0.40 (0.23%)

Market capitalisation

GBP1,105m

More on this equity

Research: Real Estate

Cairn Homes — Underlying demand supports confident outlook

Cairn Homes’ FY24 results were robust and it has issued even more challenging targets for FY25. The Irish housing market remains undersupplied, which bodes well for its future, supported by government policies to prioritise housing delivery. The valuation remains attractive, with the stock trading on a price-to-earnings (P/E) ratio of under 11x and yielding nearly 5%.

Andy Murphy

Written by

Andy Murphy

Director of content, industrials

Real estate

QuickView

4 March 2025

Price 177.60p
Market cap £1,108m
Price Performance
Share details
Code CRN
Listing LSE

Shares in issue

620.2m

Net cash/(debt) at 31 December 2024

€(154.4)m

Business description

Cairn Homes is publicly listed in Dublin (C5H) and London (CRN) and is one of the largest housebuilders in Ireland, completing over 2,000 homes in 2024, largely in the greater Dublin area. Its output includes traditional two or three-story houses, duplexes and apartments.

Bull points

  • Structurally undersupplied housing markets.
  • Well-funded government support. Positive mortgage market.
  • Declining interest rates.

Bear points

  • Planning environment remains challenging.
  • Housebuilding remains an interest rate sensitive sector.
  • Affordability is stretched.

Analyst

Andy Murphy
+44 (0)20 3077 5700

EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.

FY24 results ahead of expectations

Cairn Homes closed 2,241 dwellings (up 29%), generating revenue of €860m, also up 29% in FY24. The company generated an operating profit of €150.0m (up 32%) and a return on equity (ROE) of 15.1%. The volume, profit and ROE were all ahead of expectations. The average selling price (ASP) net of VAT remained broadly stable at €383,000 (FY23: €389,000), reflecting a step up in lower-priced, affordable homes. Despite the lower ASP, the operating profit margin edged up 40bp to 17.4% as the company contained operating costs, reflecting operating leverage in the business. Additionally, the company returned €115.3m to shareholders via share buyback programmes and its progressive dividend policy.

Cairn is building momentum for future sales

In FY24, Cairn invested heavily in construction activity, starting 4,100 new homes (2,162 in FY23), implying a confident outlook. The company also closed several forward fund transactions, which will see it deliver c 2,150 social and affordable homes to its State Partners. One of the deals was with the Land Development Agency, which is its first deal under the Project Tosaigh 2 platform.

Positive outlook into FY25

At 26 February, the company’s forward order book had increased c 5%, up to 2,593 new homes (net sales value of c €989m), from 2,473 (net value of €946m) at a similar point last year. Cairn expects FY25 revenue growth of over 10%, EBIT of c €160m and an ROE of c 15.5% as it continues to invest in construction activity and targets its core first-time buyer market. This growth is expected to be underpinned by 11 new private sale launches in the first half of the year.

Valuation: Under 11x P/E, yield approaching 5%

The shares trade on a P/E ratio of 10.8x for FY25 and yield nearly 5%. The outlook remains encouraging. The company trades on a price-to-book ratio of c 1.8x, which reflects the higher than sector average ROE, which we believe is c 7%.

Source: Edison Investment Research, LSEG Data & Analytics

Consensus estimates

Year end Revenue (€m) EBIT (€m) EPS (EUc) DPS (EUc) P/E (x) Yield (%)
12/23 666.8 113.4 12.70 6.30 16.9 2.9
12/24 859.9 150.0 17.90 8.20 12.0 3.8
12/25e 945.7 158.0 20.00 10.20 10.8 4.7
12/26e 995.7 164.7 21.30 12.40 10.1 5.8

General disclaimer and copyright

This report has been prepared and issued by Edison. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright 2025 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or sol icitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

More on Cairn Homes

View All

Latest from the Real Estate sector

View All Real Estate content

Research: Financials

Santam — Hard underwriting cycle delivering profit growth

Santam delivered strong FY24 results with a 50% increase in headline earnings per share (HEPS) to ZAR34.77 (EPS, including discontinued operations in FY23, was up 12.9%). The underwriting margin more than doubled, from 3.5% in FY23, to 7.6% and Santam had a healthy 10.5% growth in gross written premiums (GWP). The margin increase from 6.5% in H124 to 8.6% in H224 was achieved due to a more conducive natural perils environment, resulting in the claims ratio dipping to 59.9% (compared with 62.3% in H124 and 66.2% in FY23). Return on equity (RoE) of 32% was well ahead of the company’s target of 24%. A strong share price performance over the past year has increased price-to-NAV ratio to 3.1x, which is a move towards the 3.2–3.7x trading range seen before the COVID-19 pandemic.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free