Berkeley Share Discussion Threads

[sogoesit] 08/9/2015 15:40

I don't view housing construction as a property asset business at all.
On winding down a company like Berkeley there would be nothing left (in extremis).

If I was interested in a London property company I would own Land Securities or British Land.
Their returns are not the same at all.

[rcturner2] 08/9/2015 14:24

they much more like an asset business than most people realise

[dr_smith] 08/9/2015 14:05

I beg to differ re "house builders are really just a play on land prices".

A self build can save 20-25% versus market, so if land price is static, there should be a like margin for builder, who can also gain from economies of scale, which the self builder doesn't have.

Admittedly earnings growth in this scenario would be less, but you would typically have Return of capital instead, IMO :-)

If land prices fall, builders could stock up their land banks, people would still need and buy homes, though renting over owning would likely be more favoured. Also land bank would be devalued, but given that they are circa 3 years worth of plots (I think) and housing shortage is likely to be with us for 3 years, then there is no reason to be left holding high cost land, to be deflated/lost upon sale.

No doubt land bank buyers are acutely aware of this and part of the reason they strive to carefully manage growth.

[rcturner2] 08/9/2015 13:01

housing is cyclical dont forget

house builders are really just a play on land prices

[dr_smith] 08/9/2015 12:42

Sogoesit - 'dark stranger's head' - It was a flippant random comment, not being a chartist forecaster myself. ;-)

FTSE is 7% lower than January 2015, whilst BKG is up circa 50%, though some of this, IMO, is bounce factor, following last years lull.
I guess the risks are:
1)When market turns and houses are in supply equiibrium (long way off yet) price will dive.
2) Unforeseen sh*t happens. (e.g. RBS/sub prime market fall - despite BOE monitoring of their asset/liability ratios).

Morale - Don't put all your eggs in the one basket, though I have to admit, there aren't many good baskets out there at the moment outside housing.
All IMO, DYOR :-)

[sogoesit] 08/9/2015 11:04

So, at 23.5%pa that makes £41 by September next year.

FTSE 250 yields 2.51%; FTSE 100 3.87% at 31 August.
BKG current forecast yield til 2020 is 5.22% at this price.
PSN, also with a Capital Return plan yields 5.7% over 2 years to 2017.

On that basis it's undervalued imv. Certainly, as a quasi-bond, I would buy now given the London/SE market and, when the dividend arrives, it will be re-invested.

What are the risks (there must be some)?
I don't see a dark stranger's head; it's in a channel parallel to its other (lower) upward trend channels :-)

[dr_smith] 08/9/2015 09:16

£40 is unrealistic
.. for most sectors, but not for housing construction.
Could be:
1) Same as has been flat lining around £34 for a while
2) Increased 30% in 4 months, so could be 90% increase by May.
(But May jump was a one off following election, so don't get too excited)
3) Working off average EPS for next 2 years (-7 + 54/2) implies circa 23.5% increase p.a.
4) Tea leaves /chartist see head and shoulders of a tall dark stranger

I'll opt for 3) and sit tight.
All IMO, DYOR :-)

[r ball] 08/9/2015 09:06

Already XD. Its not really a yield, more a capital return.

[sogoesit] 08/9/2015 08:46

£40?
Would make its yield 4.5% and not stretched... if the market rallies significantly by Christmas it could add the £5 (14%) by then not counting the boost by entry to the FTSE100 on 21 October.
90p due on 17 September.
Good Luck!

[r ball] 08/9/2015 08:38

Just does what it says on the tin. Plods along. Trading statements tend to be without flourish and the results speak for themselves.

No reason to sell. £40 by May??

[chinese investor] 08/9/2015 08:33

Lovely Share !

[silverfern] 08/9/2015 07:10

I've used the current market crisis to buy more on price dips. Compare the FTSE100 graph with BKG and it's clear the recent weeks turmoil have only helped establish the company higher up and therefore more safely in the 100. WHere the 100 goes from here though is anyone's guess

[r ball] 08/9/2015 07:06

On track. No warnings. Relief uptick?

[r ball] 07/9/2015 08:14

Updat tomorrow

[r ball] 02/9/2015 17:41

update due next week.

[sogoesit] 02/9/2015 17:17

Definitely included, promoted from the 250. It will replace Weir Group on 21/09.
It'll join other house builders Barratt, TW and Persimmon.

[gargleblaster] 02/9/2015 16:28

Looks like BKG could be joining the FTSE 100 - could be giving it a bit of a leg up at the moment!

[r ball] 29/8/2015 09:20

£40 target sell May

[r ball] 18/8/2015 08:21

considering ex div. - that's a new high.

[plasybryn] 14/8/2015 15:54

Good article in Investor's Chronicle on house builders.

[phosphorane] 14/8/2015 13:41

htt://www.stockopedia.com/content/stock-in-focus-berkeley-group-may-yet-surprise-investors-104494/Interesting article.

[scottishfield] 13/8/2015 09:05

Ex divi today explains the dip, other builders up today. Might get some more.

[r ball] 11/8/2015 17:06

The dividend policy is designed to ensure company does not overspend on land acquisition.

SP undervalued v. peers.