Berkeley Share Discussion Threads

[r ball] 11/8/2015 12:34

article in one of the dailies apart massive dividend to directors. as its a capital return it somewhat misses the point. if they built the business then surely its OK for them to take a % out as it shrinks.

[r ball] 10/8/2015 20:12

it's a quasi capital return not a dividend. interestingly they have not accelerated the dividend but instead using cash to accelerate developments.

[gargleblaster] 10/8/2015 17:34

IC has BKG as one of its "hidden value" stocks;

Five-star kings

Berkeley
Market cap £4.5bn
Price 3,289p
Forward NTM PE 13
Dividend yield 5.5%
Return on equity 27.5%
Operating cash conversion 108%
Operating margin 23.3%
Three-year historic EPS 123.1%
Average two-year FY forecast EPS growth 15.7%

Shares in London-focused housebuilder Berkeley (BKG) have risen by a whopping 30 per cent over the past year, yet still trade on a paltry next-12-months consensus forecast multiple of 13 times. Such a lowly rating for a company firing on all cylinders is not surprising in the housebuilding sector, though. Valuations are usually depressed because these cyclical companies often have lots of inventory to shift off their balance sheets when there's a downturn.

Still, given the current strength of its markets, aided by the property-friendly outcome to the general election, now appears as good a time as ever to buy shares in this high-flying company. Berkeley, which tackles large, complex sites in London and the south-east - where it has the ability to transform areas through development - certainly has the wind in its sails. Recent work to get new or improved consents on 40 per cent of its sites drove a significant rise in the achievable gross profit from its land bank, leading management to upgrade forecasts for 2017 and 2018.

Full-year results for the year to April 2015 were very encouraging. Operating profits grew 40 per cent to £524m, while a slight fall in new home sales was more than offset by a 36 per cent increase in the average selling price to £575,000. That success persuaded management to maintain the dividend per share (DPS) at 180p, which at the current share price represents an attractive yield of 5.5 per cent. Importantly, such a fat payout didn't stop net cash balances from climbing more than threefold to £431m.

Given Berkeley's dominance of the high-end London housing market and the visibility of its earnings, those bumper dividend payouts are expected to continue. But some reckon its unique exposure to the costly capital could see it hit with rising land costs. The base rate rising fast or bank lending shrinking back are other factors that could weigh on its shares.

[arcadian] 10/8/2015 17:32

It was given a boost along with others in the sector in The IC last Friday and of course there is the dividend buying before the ex div on Thursday.

[dr_smith] 10/8/2015 15:24

Yes, after the plateau around 34.00 it seems to have gone up another tier.
I confess I am surprised, as I don't believe the sector has changed expectations, so presumably a reflection of other sectors disappointing.

[chinese investor] 10/8/2015 14:57

Looking Good !

[dr_smith] 10/8/2015 11:55

After 'Super Thursday' and average Friday (finishing on a high) I was expecting 'boring Monday' with a market correction/profit taking.

I'm guessing with China on a dive at the mo' and oil off down again, FTSE folks are moving out of them into the UK housing/construction as a safe haven.

[gargleblaster] 10/8/2015 11:27

I suspect that the rise today along with other property/commercial property companies continues to be off the back of the BOE decision to hold interest rates by the 8:1 margin.

[dr_smith] 06/8/2015 13:42

R Ball,
Re 'dirty money' - I didn't intend to imply concern for SP, at worst would only perhaps a short term downward blip whilst questionable buyers in pipe line were verified/replaced if that is decided as the way to go.
Point I wanted to make, is that this is something that needs to be addressed as an industry, as a Country and as a community.
If nothing is done, it will only get worse.

[chinese investor] 06/8/2015 12:52

Quality Housebuilder !

[r ball] 29/7/2015 21:42

noise. ignore. expect slow sink in share price and increase on trading statement. £36.

[dr_smith] 28/7/2015 08:36

..and now made front page of the BBC business:

David Cameron: UK property no safe haven for 'dirty money'

[dr_smith] 27/7/2015 08:51

Just spotted this:
Foreign criminals 'driving up UK house prices'


It concludes with:
"If [estate agents] have a suspicion that there may be money laundering involved, then they absolutely should be submitting a suspicious activity report.

"You are at risk of committing a criminal offence if you do not do that."

Personally, I am surprised by the way the above is expressed on a fudged way using words like 'should' and 'at risk'.

They should be saying (or changing law so that it is so):
"If [estate agents] have a suspicion that there may be money laundering involved, then they absolutely must submit a suspicious activity report.

"You are committing a criminal offence if you do not do that."

If we have a set up where estate agents are not compelled to report, then commercial greed for a 2% commission will mean they turn a blind eye to it - which seems to be exactly the case from the TV documentary the other week.

[r ball] 22/7/2015 20:58

Last hurrah September?

[rcturner2] 10/7/2015 07:49

I think quite a few countries do not allow foreign buyers of housing unless the buyer actually lives in the property. I think that is pretty good idea.

[dr_smith] 09/7/2015 16:39

Yes, RCTurner2 - I expect it is top end only, but with ripple effect on prices lower down. My concern is more ethical than financial re Russian funds.
On more wordwide legitimate sales view, i am aware of an increasing amount of overseas investment in housing/buy to let.
Personally, I would like to see UK nationals housing buying capacity to be protected from overseas inflationary factors, even though I believe in a free economy.
Housing is not something the majority have freedom of choice over.
If you live/work have relatives in XYZ UK county, then that is where you life is destined.
It is the same question as say Devon/Cornish locals versus rich Londoners, but now context is UK/Rest of World.

[rcturner2] 09/7/2015 15:00

Is it not the case though that is only at the very top end of the market, houses at several millions or more? Most regulation housebuilders are not selling in this way?

[dr_smith] 09/7/2015 14:53

It amazes me how the big institutions are collectively saying, via the SP, Property sector' is in for big problems following budget, then hours later reversing their decision.(Yesterday afternoon versus this morning).

It makes us PI's look good ;-)

Co-incidentally I caught the end of a TV doc last night showing the unchallenged ease with which dodgy Russian money can enter the London property market.
The also said that outflows of Russian money from Russia (possibly via Cyprus) could be matched to inflows in to the London/UK property sector.
The conjecture versus actuality was hard to pin down, but where there is smoke...
The conclusion was that London property is a massive money laundering pot.

Gulp. That means me (and you) profit from dodgy dealings!
OK, indirectly, but food for thought.

[redips2] 09/7/2015 10:11

Anyhow the gap has now closed, that is except for the lower gap which may be a break way.... happy to hold .

[dr_smith] 08/7/2015 16:45

R Ball - Banks????!!!!
I worked in banking (NatWest)for 23 years and relied on a number of governing strategies - including BOE to avoid crazy happenings. I was wrong and lost decades worth of shares in lieu of cash - what was to be my pension fund.
The mental scar remains and dodgy goings on in City is as prolific as ever.
Aside from, that Banks could be amongst Greece creditors - directly or indirectly.

[essentialinvestor] 08/7/2015 16:40

Depends if you are trading or holding long term for income.

Back on my watch list.

[rcturner2] 08/7/2015 16:33

RCTurner2 19 Jun'15 - 16:01 - 1179 of 1199 0 0 edit

Decided to take profits today, good luck all who remain. Happy with the run from £25 in short order. Taken a gamble elsewhere (CDI).

R Ball 20 Jun'15 - 16:30 - 1180 of 1199 1 0

No reason to sell.

[r ball] 08/7/2015 16:15

me too. don't forget that BKG has been underperforming the sector. could be time to switch into leisure and banks.

[dr_smith] 08/7/2015 16:10

I agree R Ball.
I'm down loads today due to property sector, but not too bothered as it's an interim blip and wasn't planning to sell any time soon.
I'd use it as a buying opportunity but already (happily) over-committed to property sector and wish to keep some balance - though as you suggest, alternative low risk options are thin on the ground.