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Berkeley Group enjoyed a solid performance last year, but investors are naturally more keen to find out what's in store for the year ahead.
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The bald facts tend to suggest more of the same. Gearing is less than 1 per cent, so there is no worry about banking covenants, while the forward order book stands at £1.2bn - more than one year's sales, and up 29 per cent from a year earlier, although since last November, sales have been running about 25 per cent below historic average levels. What's more, further pressure on the housing sector will inevitably lead to falls in land values.
This could hit Berkeley, but the builder also wants to take advantage by buying land on the cheap. So Berkeley is proposing to alter the Scheme of Arrangement that has already seen it return £9 per share to shareholders of a proposed £12. The group now plans to defer payment of the final £3 for up to three years to free up funds to buy land.
Landsbanki expects 2009 pre-tax profits of £195m (£194m in 2008) and EPS of 114p (114p in 2008).
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| BERKELEY GROUP (BKG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 660p | MARKET VALUE: | £797m | |
| TOUCH: | 660-661p | 12-MONTH HIGH: | 1,561p | LOW: 660p |
| DIVIDEND YIELD: | #VALUE! | PE RATIO: | 6 | |
| NET ASSET VALUE: | 564p | NET DEBT: | 1% | |
| Year to 30 Apr | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 1.27 | 230 | 130 | 22.3 |
| 2005 | 0.79 | 155 | 95.0 | nil* |
| 2006 | 0.92 | 165 | 101 | nil* |
| 2007 | 0.92 | 188 | 113 | nil* |
| 2008 | 0.99 | 194 | 114 | nil* |
| % change | +8 | +3 | +1 | - |
*Excludes special dividends to shareholders |
||||
Berkeley Group is virtually debt free, and plans to loosen up more cash to buy cheap land. That said, while the sector remains out of favour, it is hard to see the share price carving a separate path from the other housebuilders despite the group's defensive qualities. Fairly priced.
Last IC View: Fairly priced, 1,304p, 7 Dec 2007
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