PSN, BDEV, BKG: 3 housebuilding stocks you can focus now

April 05, 2022 10:14 AM BST | By Sreenivas D Ajankar
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  • Media reports are doing the round that the UK government may drop its demand for housebuilding companies to contribute to the cladding remediation fund.
  • Relief from cladding fund contributions can be a positive trigger for housebuilding companies like Persimmon, Barratt and Berkeley, etc.

The housebuilding stocks like Persimmon Plc, Barratt Developments Plc, Berkeley Group Holdings Plc that are part of the FTSE 100 index witnessed a sudden surge in demand after a media report claimed the UK government might drop its demand for housebuilding companies to contribute to the cladding remediation fund.

The current discussion between the government and housing industry body is over the plan to fix dangerous and unsafe cladding on buildings between 11 meters to 18 meters high. The UK government has previously asked housebuilders to contribute nearly £4 billion towards the fund. However, in the ongoing negotiation talks between the two parties, the remediation fund discussion reportedly may have been postponed to another date.

3 housebuilding stocks in focus

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Relief from cladding fund contributions might act as a positive trigger for housebuilding companies. Let us look at a few FTSE listed stocks that could be positively impacted:

Persimmon Plc (LON: PSN)

FTSE 100 listed real estate company builds and sells residential properties of different sizes in the UK. It operates through brands like Persimmon Homes, and Charles Church. The company reported excellent business growth in 2021 amid strong demand for new homes from buyers. Persimmon delivered 14,551 homes to its customers and strengthened its development pipeline by adding 20,750 plots. As a result, the total group revenue increased by 8% to £3.61 billion, with profit before tax of £966.8 million.

Persimmon Plc’s last close was at GBX 2,210 on 04 March 2022, with a market cap of £7,056 million.

Barratt Developments Plc (LON: BDEV)

The real estate company is one of the largest housebuilders in the UK. It manages several well-known brands like Barratt Homes, David Wilson Homes, and others.

For the six months ended 31 December 2021, Barratt reported a 2.6% rise in operating profit to £434 million on revenue of £2,247.1 million. The company has strong forwards sales of 15,736 homes as of 30 January 2022, valued at £4,109.7 million.

Barratt Developments Plc’s last close was at GBX 533.60 on 04 March 2022, with a market cap of £5,456 million.

Berkeley Group Holdings Plc (LON: BKG)

The company is engaged in the development of residential and mixed-use properties. It operates in the UK market.

In March 2022, Berkeley Group bought the remaining 50% stake in St William Homes LLP from its joint venture partner National Grid plc for total cash consideration of £412.5 million. Through this acquisition, Berkeley Group will get complete control of 24 sites, which represents over 20,000 future homes.

Berkeley Group Holdings Plc’s last close was at GBX 3,848 on 04 March 2022, with a market cap of £4,312 million.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.


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