RE: Target 67025 Jul 2018 17:39
Staying Bullish On Builders (1036 Gmt)
It's been tough for UK housebuilders this year because of worries that their business cycle has peaked but their share price falls have opened up opportunities, according to Berenberg analysts who believe fears over rising costs and cooling house prices are overdone.
"The UK housing market continues to move in a somewhat sideways direction, with prices creeping up (while falling slightly in London) and transactions recording small declines. This masks the performance of the new build market (c12% of overall transactions), which has outperformed the secondary market by c45% in the past four years," they say.
"We expect these trends to continue, supporting strong levels of cash generation and returns (7% average yields) across the sector," they add.
UK housebuilders have fallen 16 percent in 2018, erasing last year's big bounce and leaving them at an "unwarranted" 29 percent valuation discount to recent history.
Initiations And Reinstatements
* In a note "Still no place like home" Berenberg raises housebuilding coverage to 11 companies, having a positive stance on sector and expecting the new build sector to continue to outperform the wider market It starts with "buy" for Barratt Developments , Bellway
, Bovis , Redrow and Taylor Wimpey
and "hold" for Berkeley Group Holdings , Crest Nicholson , McCarthy & Stone and Persimmon Brokerage sees similar characteristics on the companies rated "hold", exposure to the slower secondhand market and London and the South East cycle peaked with performance reverting to mean
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