Homeserve has £400bn business covered
HOMESERVE chief executive Richard Harpin is nothing if not enthusiastic. Having founded the business 24 years ago, he is still firing on all cylinders, with bold new plans to turn Homeserve into a global home repairs powerhouse.
City brokers seem to believe in his vision. Midas recommended the shares a year ago when they were 595½p. Today, they are 804p, following upbeat half-year figures last week and a better-thanexpected 15 per cent increase in the interim dividend to 4.7p. The surge in price benefits Harpin more than most. As a 12.5 per cent shareholder, his holding is worth more than £330million. Initially, Homeserve offered insurance against home emergencies in the UK. It then expanded overseas. The American division has just delivered its first ever halfyear profit. US momentum should pick up following a large acquisition in 2016 and a recent deal providing access to millions of new customers.
Not content with insurance cover, Harpin bought Britain’s second largest boiler installer, Help-Link, in August. More significantly, Homeserve has acquired Checkatrade, an online business which allows homeowners to check tradesmen’s credentials and see how other customers rate them.
Checkatrade is already used by 26,500 individually vetted tradesmen, and they generate £3.1 billion of revenue from the site. Until now, they have been charged a flat rate to be on the Checkatrade platform but Harpin intends to change the fee structure to reflect revenues generated. He also hopes to add more tradesmen and attract extra customers to the site.
Success could be transformative for Homeserve, as the global home repairs and improvements market is valued at £400 billion.
Nearer term, brokers expect profits to increase by 25 per cent to £141million in the year to March 2018, rising to £160million the following year. A full year dividend of around 18.5p has been pencilled in, rising to 20.3p in 2019. Midas verdict: At 804p, Homeserve shares have risen by around 35 per cent since last year. If all goes according to plan, the stock should continue to gain ground. Cautious investors may wish to sell around a quarter of their shares however, just in case there are bumps on the road.