UK housebuilding in good shape, suggests Deutsche
Date
10/4/2016 5:54:00 AM
(MENAFN- ProactiveInvestors - UK) Giles Gwinnett, Follow !function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0];if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); 10:07
A record set of full year results from Cala Group provides evidence that the house building sector is in good health, reckons Deutsche Bank.
"While the group has a higher average selling price than many of the volume housebuilders (reflecting its geographic mix and size of product), we nonetheless see it's trends as further positive reinforcement of trading conditions in the sector, " says Glynis Johnson.
Cala was founded in Scotland in the late 19th Century and has expanded recently, notably in the south. Pre-tax profits rose by 18% to just over £60mln, while revenue rose 15% to £587.1mln.
Trading has been strong since the Brexit vote and Cala has reported enquiries are up 9% year on year, while private reservations are up 46%.
In terms of its ratings on the big players, Deutsche rates Barratt Developments plc (LON:BDEV) a 'buy' with a target of 575p and also has a 'buy' on Berkeley Group Holdings plc (LON:BKG) with a target of 3,829p and a 'hold' on Persimmon Group plc (LON:PSN) with a target of 2,092p.
Looking ahead, Deutsche notes that the Cala chief reckons changes in stamp duty are now more likely than changes in Help to Buy.
Meanwhile, over at Barclays, the scribes have been touching on the same subject, saying further controls to the formerly booming buy-to-let market are UNLIKELY to be enacted.
Analysts at the bank have taken a more positive stance on the specialist lenders - ones who lend to buyers hoping to let out properties.
'Some measures of control were perhaps inevitable to slow rates of growth exceeding 40% year-on-year,' it said.
'However, we now believe we are past the nadir for BTL outlook.
'We view further regulatory and taxation controls as unlikely if the UK government does not want to risk pushing the economy into a post-Brexit recession.
'We do not believe that a reversal of any BTL-related stamp or income tax is likely in the Autumn Budget.'
Barclays has upgraded the so called challenger banks OneSavings Bank (LON:OSB) and Aldermore (LON:ALD) to 'overweight' from 'equal weight'.
'UK challenger banks remain geared plays on the macro, in our view. However, high profitability, comfortable capital ratios and low valuation multiples should provide significant insulation,' it said.
Meanwhile, Barclays left Paragon and Shawbrook (LON:SHAW) at 'equal weight'.
Elsewhere in brokerland, Jefferies got the red pen out for Capita Group plc (LON:CPI), chopping the target down to 815p from 1340p but repeating a 'buy'. The group issued a shock profit warning in late September.
Meanwhile, the same US broker downgrades the target price on heating and plumbing group Wolseley (LON:WOS) , cutting it to 4140p from 4180p previously and repeats a 'hold'.
Burberry plc (LON:BRBY), the maker of handbags and coats, has an 'equalweight' repeated by Barclays, which lifts the target price to 1350p from 1320p previously.
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