JPMorgan Cazenove downgraded Countryside Properties but upgraded Crest Nicholson on Friday as it took a look at the UK housebuilding sector.
The bank said that after underperforming the market last year, the sector’s performance has been largely in line with the market this year.
“We continue to find the sector’s valuation attractive on 1.4x P/TNAV in line with the LT average, with potential to improve returns over 2022-23,” it said.
“In our view, the key themes this year will be: 1) the well-anticipated rate hikes; 2) continued focus on inflation and associated margin dynamics; 3) upcoming Future Homes Standard (FHS) regulation; 4) tax rates changes from 19% currently to 29% by 2023; and 5) potential resumption of surplus returns.”
JPM maintained its preference for overweight-rated in Berkeley Group and Persimmon, as well as Taylor Wimpey.
It downgraded Countryside to ‘underweight’ from ‘neutral’, “with uncertainty on delivery on highly ambitious growth targets and potential for negative surprises the given unwinding of the housebuilding division”.
JPM upgraded Crest Nicholson to ‘neutral from ‘underweight’ as it said “management actions are now starting to bear fruit”.
