Morning Equity Briefing
Berkeley Group
(BKG LN)
Issues trading statement
Robert Gardiner
| Closing Price: | 838p | Rating: | Neutral | 30/06/09 |
FACTS: Berkeley Group has issued (September 8th) an interim management statement covering the period from May 1st to August 31st.
ANALYSIS: Demand for properties in the period has remained resilient, particularly in London, driven by a shortage of supply and demand from international purchasers. Outside London, a lack of credit availability and overall consumer confidence is preventing an increase in transaction volumes at this point. In line with the group's strategy, an additional 23 sales outlets have been opened in the period while eight new sites have been acquired. Net cash remains in excess of £300m. Not surprisingly, the new government's move to decentralised planning has created a degree of uncertainty in the planning process. Combined with changed design requirements for new homes, this will likely result in a lower level of new homes unless the planning burden is reduced. Despite the challenging market conditions, the group has increased the value of its land-bank, held forward sales above £600m and maintained its target of growing EPS by 10% in the current financial year.
DAVY VIEW: While flagging weak trading conditions outside London, the group remains committed to land spend and continued to make acquisitions in the period. Importantly, it is maintaining its FY guidance despite the challenging market conditions.