The market is clearly pleased with results from Southeastern-focused housebuilder Berkeley Group (BKG). Yet it is the strength of the group's landbank and forward sales that will continue to drive momentum.

Investors showed their approval by pushing shares 8.1% higher to £34.14 on Wednesday, pretty good going for a £4.3 billion FTSE 250 company. This follows and impressive 42% increase in pre-tax profit to £539.7 million in the 12 months to the end of April.


Beating analysts expectations and with an outlook characterised by RBC Capital Markets as 'supportive', our call on Berkeley on 4 June at a price of £30.90 now looks rather prescient and we remain positive on this as the 'ne plus ultra' of UK housebuilding stocks.

Land holdings at the group comprise 37,473 plots, compared to 35.963 plots this time last year and Berkeley ended the year ungeared with net cash of £430.9 million

Colin Sheridan at Davy research points out that the company, which still sees itself as 'well placed in an attractive global city (being mainly in London) is now targeting £2 billion in pre-tax profits in the three years 2015/2016, 2016/2017 and 2017/2018 – well above previous consensus expectations.'

Issue Date: 17 Jun 2015