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Summary
- Construction PMI in July saw a decline compared to the June month indicating a slow pace of construction activities in the United Kingdom.
- The growth rate was slow due to a shortage of raw materials and subcontract workers.
Construction activity in Britain lost its growth momentum, growing at its slowest pace since February as per the July month construction PMI data compiled by the IHS Markit/CIPS. The growth rate was slower in all the three main categories of work, i.e. housebuilding, commercial building and civil engineering activity.
Construction PMI in July was at 58.7, a sharp decline from 66.3 reported in June month due to raw material shortage as demand for construction material continues to outstrip supply, while the shortage of subcontractors like carpenters, the bricklayer was another reason for the fall in construction PMI data.
Let us look at 4 FTSE listed housebuilding stocks and see how they are reacting to the news:
Berkeley Group Holding Plc (LON: BKG)
The company develops residential and mixed-use properties. It sells homes under various brand names like Berkeley First, St George, and Berkeley Partnership and operates principally in London, Birmingham and the South East.
The company reported a profit before tax of £518.1 million with basic earnings per share of 339.4p per share during the year ended 30 April 2021. There was an increase of 4 per cent reported by the company in the construction material cost since the start of the current calendar year, primarily due to the surge in construction activities that led to strong demand for construction products. As a result, the company anticipate a tightening in material availability with lead times increasing for specific products.
Shares of Berkeley Group trades at GBX 4872, down by 0.43% on 6 August at 08.47 GMT+1, with a market cap of £5.94 billion. The stock has given 9.29% returns to its shareholders in the last one year.
Barratt Developments Plc (LON: BDEV)
The company’s stock is a constituent of the FTSE 100 index, which develops housing and commercial projects in the United Kingdom. The company sells homes under various brand names like Barratt London, and Barratt Homes.
The company delivered 17,243 homes, including the 726 homes under the joint venture, which is ahead of the company’s previous guidance during the year ended 30 June 2021. The company expects a profit before tax of £107 million, which is at the top end of market expectations and will publish its annual result on 2 September 2021. The company has a positive future outlook but has raised specific concerns like shortage of raw materials, subcontractors and suppliers, which could impact the company’s growth.
Barratt Developments Plc trades at GBX 711, down by 0.31% on 6 August at 08.47 GMT+1, with a market cap of £7.26 billion. In the last one year, the stock has given 36.76% returns to its shareholders.
Countryside Properties Plc (LON: CSP)
The company is a market leader in delivering high quality mixed tenure with a strong focus on urban land redevelopment. It has over 40 years of track record of working with partners from the private and public sectors. The company’s stock is a constituent of the FTSE 250 index.
The company delivered 1096 homes to its consumers in the 13 weeks from 1 April to 30 June 2021 and generated a revenue of £287 million (Q3 2020 revenue: £101 million). However, the number of active sites saw a decline during the quarter due to planning delays at the site as reported by the company. Countryside Plc has started its initial buyback program on 26 July 2021, which will end on 5 November 2021. During the initial phase, the company will buy back £52 million worth of shares
Countryside Properties Plc shares trade at GBX 518, down by 0.39% on 6 August at 08.47 GMT+1, with a market cap of £2.72 billion. In the last one year, the stock has given 74.04% returns to its shareholders.
Vistry Group Plc (LON:VTY)
The company operates in the housebuilding market and provides homes of various sizes. It owns a land bank of 40,218 plots in the United Kingdom.
During the six-month ended 30 June 2021, the company delivered 3,126 homes and is firmly on track to deliver 6,500 homes by the year-end with an adjusted gross margin of 22%. The company said it had witnessed strong demand and an uptrend in home prices during the last six months. However, the company also noticed a rise in inflation across the labour and material supplies.
Shares of Vistry Group Plc trades at GBX 1201, down by 0.70% on 6 August at 08.47 GMT+1, with a market cap of £2.67 billion. Vistry Group Plc has given 88.99% returns to its shareholders in the last one year.
