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Berkeley Group: capital returns

London housing market still “deeply under supplied”
Berkeley Group: capital returns
  • FTSE 100 group doubles down on London
  • Future expected profits edge up

High-end property developer Berkeley Group (BKG) – which bills itself as “the country’s leading place-maker” – today renewed its commitment to the London market, arguing that the effects of the pandemic will fail to engender “a permanent structural shift that has the capacity to reverse urbanisation or detract from the attraction of a global city”.

You’d better hope so if you’re in the business of selling homes in the capital and the South East of England for an average £770,000 each – as Berkeley managed to do in the 12 months to 30 April. That was up from an average of £677,000 the previous year, when the developer also sold fewer properties.

So, while run-rate profits are below the boom years of 2017 to 2019, the cash-rich group has good reason for confidence, particularly after buoyant prices for land holdings and additions pushed up estimated future gross profits from £6.4bn to £6.9bn in a year. That suggests capital returns – which edged up £280m to £334m – can continue to climb. Hold.

Last IC view: Hold, 4,442p, 13 Jan 2021

BERKELEY GROUP (BKG)  
ORD PRICE:4,585pMARKET VALUE:£ 5.58bn
TOUCH:4,584-4,587p12-MONTH HIGH:4,902pLOW: 3,946p
DIVIDEND YIELD:tbcPE RATIO:14
NET ASSET VALUE:2,611pNET CASH:£1.13bn
Year to 30 AprTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20172.72812468137
20182.8497758790.1
20192.96775481119
20201.92504325118
20212.20518339tbc
% change+15+3+4-
Ex-div:tbc   
Payment:tbc