Berkeley Share Discussion Threads

[r ball] 31/10/2013 11:25

no. director sell???

[bobosh13] 31/10/2013 11:09

Anyone know the reason for the sharp fall in the share price this morning?

[miata] 29/10/2013 12:10

Deutsche Bank is pushing the housebuilders.

For Berkeley we believe the London exposure is well understood. However we
view the market is currently under-estimating the significant contributions to
EBIT from London for the volume housebuilders which we estimate to reach
15-30% for Barratt, Bellway, Taylor Wimpey and Redrow by 2015. With a
significant under-supply of homes expected over the coming years, we
anticipate the London market to remain robust. As such we see those
operating with scale and history in the region to see continued strong returns
from their London divisions. Reflecting our analysis we have upgraded
forecasts and target prices and reiterate Barratt as our top pick.

New entrants into London driving its importance to the sector
Within the UK a number of the listed developers have had long standing
businesses in the capital city. Berkeley, Barratt and Bellway have all had
operations in London on some scale through the past cycle. However since the
downturn a number of others have sought to build up positions, either
returning to London as in the case of Redrow or graduating coverage from
outer London towards the centre such as Taylor Wimpey and Crest Nicholson.
Given the time taken between land acquisitions and actual completions many
of these "new entrants" are forecast to show significant growth in their
London operations through 2014 and 2015.

Profitability expected to remain high but some pressure building
With developers citing similar hurdle rates on land buying across the UK but
with the benefit of significant house price inflation since 2009 we believe EBIT
margins on London sites bought since the downturn to be ahead of the rest of
the country. For those working on small sites significant land buying will be
required to sustain volumes; land cost inflation on the more straightforward
sites may also tame future margins for the pure developer. However we
believe more sustainable profitability should be available for those who can
access land where competition is limited by factors such as vendor access,
intricacies of planning; and/or complexity of build. Companies such as
Berkeley, Barratt, and Bellway we see as better positioned for sustainable
margins and volumes from London, base loading P&Ls with quality earnings.
London housing market expected to remain supportive

With the Greater London Authority forecasting approx 34K new households pa
in London to 2033, and supply models suggesting build rates of 24-27.7K units
pa for the coming 10 years, a strong underbuild in the region appears possible.
Therefore while house prices in the capital are back at peak levels, we believe
there is scope for mid-low single digit house price inflation on average in the
coming years. The current level of underbuild in London does not differentiate
the capital from much of the UK, and while the greater levels of housing equity
has driven London house price inflation ahead of the country in the past few
years, improvements in LTV across the UK (banks greater willingness to lend,
government mortgage initiatives) suggests that future house price inflation in
the capital may not be as strongly differentiated going forward.

[miata] 28/10/2013 16:37

28 Oct 2013 Taylor Wimpey TW. Deutsche Bank Buy 109.30 111.20 140.00 140.00
28 Oct 2013 Persimmon PSN Deutsche Bank Hold 1,226.50 1,243.00 1,274.00 1,274.00
28 Oct 2013 Bovis Homes Group... BVS Deutsche Bank Buy 759.25 782.00 1,001.00 1,001.00
28 Oct 2013 Bellway BWY Deutsche Bank Hold 1,481.00 1,508.00 1,592.00 1,592.00
28 Oct 2013 Berkeley Group BKG Deutsche Bank Hold 2,394.50 2,400.00 2,252.00 2,358.00
28 Oct 2013 Redrow RDW Deutsche Bank Hold 254.75 254.10 278.00 294.00
28 Oct 2013 Barratt... BDEV Deutsche Bank Buy 333.00 334.20 391.00 394.00

[miata] 26/10/2013 15:50

Stephen Williams, equity analyst at Brewin Dolphin:

Berkeley is less involved with Help to Buy than its peers because a significant part of its business is focused on luxury developments in London. Such homes tend to attract rich foreign clients, not British buyers hunting properties valued at less than Help to Buy's limit of £600,000.

'Their average selling price is £365,000 but their top end is £2-3million apartments overlooking the Thames at Vauxhall,' says Williams. 'So that is a different market because a lot of their buyers are overseas purchasers. Their sales are not driven by Help to Buy because they are not in that sector of the market.

'They are attracting buyers from the Middle East, Hong Kong, Europe where some of the economies have been difficult and people want to invest outside of their own countries. That is a different market to the other volume housebuilders.'

Williams says another reason for giving Berkeley a look is its highly-regarded management team. He points out that founder and chairman Tony Pidgley has called the housebuilding market correctly several times in the past. Pidgley and his team have assembled a land bank of sites that do not all have planning permission yet. The lack of planning permission means the sites are cheaper, and also that Berkeley tends to take a longer term view of its development pipeline than rivals. 'It will apply for planning permission over a long period,' says Williams. 'It is a very long land bank.'

He explains that this land purchase strategy boosts earnings, with most housebuilders averaging a 20 per cent gross profit margin but Berkeley achieving around 30 per cent. 'Generally it will cost 5 per cent to build a house so their operating margin is 15 per cent. But Berkeley Group can generally get an operating margin of 20 per cent.'

One final point to make about Berkeley is that it has announced plans to return capital to shareholders over 10-year period. It aims to return £1.7billion in cash by making three milestone payouts of £568million in 2015, and £567million in 2018 and 2021.

'If you buy Berkeley Group, you have got a certain amount of value already built into the shares,' says Williams.

[maurillac] 25/10/2013 12:28

still holding mine .. target £30
m

[nw99] 25/10/2013 10:21

Sold my shares this am as a hedge

[nw99] 23/10/2013 17:18

I just bought a new Berkeley Home delighted

[chinese investor] 23/10/2013 16:59

I own one of their flats - my neighbour is John Major !

[this_is_me] 23/10/2013 16:09

http://uk.advfn.com/p.php?pid=legacydaily&epic=L^BKG&type=1&size=2&period=10&olx_1=1&o_epic1=L^BDEV&o_type1=1&o_colour1=1&olx_2=1&o_epic2=L^BVS&o_type2=1&o_colour2=2&olx_3=1&o_epic3=L^BWY&o_type3=1&o_colour3=3&olx_4=1&o_epic4=L^RDW&o_type4=1&o_colour4=4&olx_5=1&o_epic5=L^TW.&o_type5=1&o_colour5=5&scheme=&delay_indices=1>

[miata] 23/10/2013 10:57

Inland Homes is a £100 million market cap company that has done well this year
(after stagnating for years) because of its land bank.
It has over 2,300 plots and over 1,000 have planning consent.
It has been selling to other developers.

[david77] 23/10/2013 10:42

I tried to add them but it didn't work so simply changed the first two in the list

[nw99] 23/10/2013 10:06

Chart break in blue sky

[miata] 22/10/2013 18:35

"BKG has a much lower beta than PSN and BDEV. The closest to BKG is BVS."

True, and here is a graph with BVS (and the other large market caps).

Whilst BKG has a lower beta and a lower p/e I still regard it as a comparable large cap apple.

[r ball] 22/10/2013 14:12

This_is_me

Indeed. Have held for 4 years now and have averaged up when spare money available. It's never ever hit my trailing stop loss of -15% (but came close once or twice)

Golden rule: always average up, never down.

[billy_liar] 22/10/2013 09:31

That's the key indicator I was looking at when stating 'relatively'.

:-)

Bought to hold though, not as any sort of quick trading share. Now tucked up snugly in my SIPP.

[miata] 22/10/2013 09:29

Certainly is on Price/Earnings:

.... P/E
BKG 14.7
BDEV 44.2
BVS 25.6
BWY 16.99
PSN 22.0
RDW 16.89
TW. 15.25

[billy_liar] 22/10/2013 09:02

Dipped my toe in this morning. Looks relatively cheap.

[this_is_me] 21/10/2013 23:13

That chart only compares this year; some of us bought in much earlier than that and as a consequence are sitting on much larger profits.

[grigor] 21/10/2013 22:52

Lots of news about the London property market going bonkers

[r ball] 21/10/2013 15:36

MIATA

You're not comparing apples with apples. BKG has a much lower beta than PSN and BDEV. The closest to BKG is BVS.

[david77] 21/10/2013 14:05

Miata - would you like to add Inland INL and Telford TEF Homes to that please. I know that the others had bigger divis but it would be interesting to see how the AIM shares compare.

Thanks

[miata] 21/10/2013 09:58

Could look better !