英国房屋建造业深度研究(1).pdf

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1、 Citigroup Research is a division of Citigroup Global Markets Inc.(the Firm),which does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investo

2、rs should consider this report as only a single factor in making their investment decision.Non-US research analysts who have prepared this report are not registered/qualified as research analysts with the NYSE and/or NASD.1Citigroup Global Markets Ltd Citigroup Global Markets|Equity Research Pan-Eur

3、ope Homebuilding Homebuilding Industry In-Depth Industry In-Depth 15 December 2006|104 pages UK Housebuilding UK Housebuilding A Quality Street but Time to be Selective A Quality Street but Time to be Selective The sector has outperformed the market again in 2006(eighth year in a row)The sector has

4、outperformed the market again in 2006(eighth year in a row)It is currently up 28%year to date after a 45%climb in 2005 and a 12%gain in 2004.The best stock performers have been Wilson Bowden and Berkeley Group both up over 50%in 2006.The weakest performers have been the two US exposed stocks Taylor

5、Woodrow and Wimpey.Fundamentals in the UK housing market remain robust Fundamentals in the UK housing market remain robust A shortage of supply due to tight planning,demographic-driven demand and positive prices.The sector remains too conservatively financed The sector remains too conservatively fin

6、anced Average gearing of 30%and interest cover of 11.3x.This can be improved by share buybacks,increased dividends(sector dividend cover is c3.7x in 2006),increased land spend(but only if volumes can be increased)or corporate activity.Sector consolidation is also set to continue Sector consolidation

7、 is also set to continue And while there are clear synergies for industrial buyers the bigger debate is whether or not the private equity industry will enter in a bigger way.We have upped target prices across the sector We have upped target prices across the sector Partly because we have rolled our

8、calculations to the end of 2007 but also because we have included a free cash flow element in our matrix as well as upping our sector P/E targets.We remain Buyers of Barratt,Bellway,Persimmon,Taylor Woodrow and Wimpey We remain Buyers of Barratt,Bellway,Persimmon,Taylor Woodrow and Wimpey We have al

9、so cut Berkeley Group to Sell and downgraded Bovis and Redrow to Hold.Figure 1.UK Housebuilding Sector%Change Relative to FT All Share Figure 1.UK Housebuilding Sector%Change Relative to FT All Share-30%-20%-10%0%10%20%30%40%50%1997199819992000200120022003200420052006 Source:DataStream Clyde LewisCl

10、yde Lewis1 1 +44-20-7986-4272 Aynsley LamminAynsley Lammin1 1 +44-20-7986-4092 Mike Pinkney,CFA1 Oliver J Leyland1 See page 99 for Analyst Certification and important disclosures.See page 99 for Analyst Certification and important disclosures.UK Housebuilding UK Housebuilding 15 December 2006 Citigr

11、oup Global Markets|Equity Research 2 Contents Contents Investment Summary 3Investment Summary 3 Current Trading and 2007 Outlook 4Current Trading and 2007 Outlook 4 Price Target&Recommendation Changes 9Price Target&Recommendation Changes 9 Asset Backing and the Discounted Liquidation Valuation 10Ass

12、et Backing and the Discounted Liquidation Valuation 10 Land the Black Art of Housebuilding 13Land the Black Art of Housebuilding 13 Share Price Performance 17Share Price Performance 17 Seasonal Investing 20Seasonal Investing 20 Sector Consolidation and Other Corporate Activity 21Sector Consolidation

13、 and Other Corporate Activity 21 Gearing&Interest Cover 25Gearing&Interest Cover 25 Sector Valuation Summary 27Sector Valuation Summary 27 Stock Valuation Data 28Stock Valuation Data 28 Housing Summary 31Housing Summary 31 Housing Data 33Housing Data 33 Barratt Developments Barratt Developments 1M 3

14、6 1M 36 Bellway Bellway 1M 42 1M 42 Berkeley Group Berkeley Group 3M 48 3M 48 Bovis Homes Bovis Homes 2M 54 2M 54 Crest Nicholson Crest Nicholson 2M 60 2M 60 Persimmon Persimmon 1M 66 1M 66 Redrow Group Redrow Group 2M 72 2M 72 Taylor Woodrow Taylor Woodrow 1M 78 1M 78 Wilson Bowden Wilson Bowden 3M

15、 84 3M 84 Wimpey(George)Wimpey(George)1M 90 1M 90 Analyst Certification Appendix A-1 99Analyst Certification Appendix A-1 99 UK Housebuilding UK Housebuilding 15 December 2006 Citigroup Global Markets|Equity Research 3 Investment Summary Investment Summary While 2006 has only been a solid year for h

16、ousing activity in terms of volumes and prices the sector has again outperformed the market,making it eighteight years on the trot.Yet again the reason for the outperformance this year has been valuation multiple expansion as earnings growth has only been 1%this year after a flat performance in 2005

17、(calendarised).The sector is now trading on 11.4x earnings for calendar 2007E and 12.7x for 2006E.The lack of volatility in the earnings profile,increased sector consolidation and ongoing scope for a de-equitisation of the sector continues to draw investors in.It would be relatively easy to back off

18、 the sector and take profits but we still see reasonable value across the industry especially as the fundamental shortage remains firmly in place.Outlook for 2007 Outlook for 2007 We see another robust year for the housing industry in 2007 with volumes probably edging ahead and prices running at lea

19、st in line with inflation.More aggressive growth should result in higher interest rates and a knock to consumer confidence.We have made only very minor changes to our forecasts in this note However,we have upped our price targets on the back of using 2007 forecasts,rather than 2006,and including a f

20、ree cash flow element in our calculations.Figure 2.Sector Recommendation and Price Target Summary Figure 2.Sector Recommendation and Price Target Summary Company New Target Price RecommendationCompany New Target Price Recommendation Barratt 1430p Buy Bellway 1830p Buy Berkeley 1680p Sell(Hold)Bovis

21、1050p Hold(Buy)Crest Nicholson 615p Hold Persimmon 1710p Buy Redrow 715p Hold(Buy)Taylor Woodrow 490p Buy Wilson Bowden 2100p Sell Wimpey 690p Buy Source:Citigroup Investment Research.Previous ratings are in brackets.UK Housebuilding UK Housebuilding 15 December 2006 Citigroup Global Markets|Equity

22、Research 4 Current Trading and 2007 Outlook Current Trading and 2007 Outlook The housebuilders started 2006 with good momentum from a recovering housing market.Volume growth of between 5%and 10%was widely anticipated with modest house price inflation of between 1%and 2%.The industry had generally in

23、creased the number of sites in order to deliver the volume growth in a lower inflationary environment than in recent years.As the market recovery took hold sales incentives were expected to ease also.The spring selling season was indeed strong with positive like-for-like trends in reservations per s

24、ite supported by both a stronger market and a weak comparative.London and the South-East continued to lead the recovery and net prices began to edge upwards with selling incentives easing back.Although the summer slowed in its usual seasonal manner,perhaps exacerbated by the football World Cup this

25、year,the market bounced back strongly in the autumn selling season.House price inflation gained momentum and reservations per site continued to show year-on-year increases.The Bank of England has increased interest rates by 50 bps since the summer.The autumn selling continues to be strong with the i

26、nterest rate increases not appearing to have much of an adverse effect.House price inflation is currently running around+4-5%for new homes,with stronger rates in London,and reservations continue to show like-for-like increases.The outlook for 2007 remains positive with modest house price inflation e

27、xpected and growth rates in reservations slowing as the comparative becomes more challenging.Higher interest rates could yet have a dampening effect on the market.Site visitors and reservations good autumn selling season Site visitors and reservations good autumn selling season Latest data(September

28、)shows that site visitors were higher than they were in the previous month but slightly lower than a year earlier.Although recent data shows that site visitors are lower than the same time last year this is only a recent trend and may reverse in the upcoming data for the rest of the year.A net balan

29、ce of-7%of housebuilders reported that the number of site visitors in September was down compared to the same month last year.For the year as a whole 2006 has generally seen more site visitors compared to the previous year.Figure 3.Site Visitors Net Balance of Monthly Change Figure 3.Site Visitors N

30、et Balance of Monthly Change Figure 4.Site Reservations Net Balance of Monthly Change Figure 4.Site Reservations Net Balance of Monthly Change-60-40-200204060Nov-95Mar-96Jul-96Nov-96Mar-97Jul-97Nov-97Mar-98Jul-98Nov-98Mar-99Jul-99Nov-99Mar-00Jul-00Nov-00Mar-01Jul-01Nov-01Mar-02Jul-02Nov-02Mar-03Jul-

31、03Nov-03Mar-04Jul-04Nov-04Mar-05Jul-05Nov-05Mar-06Jul-06 -60-40-20020406080Nov-95Mar-96Jul-96Nov-96Mar-97Jul-97Nov-97Mar-98Jul-98Nov-98Mar-99Jul-99Nov-99Mar-00Jul-00Nov-00Mar-01Jul-01Nov-01Mar-02Jul-02Nov-02Mar-03Jul-03Nov-03Mar-04Jul-04Nov-04Mar-05Jul-05Nov-05Mar-06Jul-06 Source:HBF Source:HBF Inte

32、restingly net reservations remain very strong suggesting that the autumn selling season has been a good one.Reservations have been consistently strong this year.The rate of change of reservations remains strong at the 25%level with September showing a significant increase compared with the previous

33、month.UK Housebuilding UK Housebuilding 15 December 2006 Citigroup Global Markets|Equity Research 5 This strong trend is clearly aided by a weak comparative but it also reflects the improved level of confidence in the housing market.Figure 5.Site Visitors 12-Month Moving Average of Net Balance Figur

34、e 5.Site Visitors 12-Month Moving Average of Net Balance Figure 6.Site Reservations 12-Month Moving Average of Net Balance Figure 6.Site Reservations 12-Month Moving Average of Net Balance-40-30-20-100102030Oct-96Feb-97Jun-97Oct-97Feb-98Jun-98Oct-98Feb-99Jun-99Oct-99Feb-00Jun-00Oct-00Feb-01Jun-01Oct

35、-01Feb-02Jun-02Oct-02Feb-03Jun-03Oct-03Feb-04Jun-04Oct-04Feb-05Jun-05Oct-05Feb-06Jun-06 -40.0-30.0-20.0-10.00.010.020.030.040.0Nov-95Mar-96Jul-96Nov-96Mar-97Jul-97Nov-97Mar-98Jul-98Nov-98Mar-99Jul-99Nov-99Mar-00Jul-00Nov-00Mar-01Jul-01Nov-01Mar-02Jul-02Nov-02Mar-03Jul-03Nov-03Mar-04Jul-04Nov-04Mar-0

36、5Jul-05Nov-05Mar-06Jul-06 Source:HBF Source:HBF Assuming that interest rates do not go up too much further,it looks like reservations in the spring selling season will continue to show like-for-like growth although the rate of growth is likely to slow.Mortgage approvals and transactions likely to ro

37、ll over in 1H 2007 Mortgage approvals and transactions likely to roll over in 1H 2007 Mortgage approvals tend to be a good lead indicator of demand trends in the housing market.Mortgage approvals have bounced back from a bit of a lull during the summer.They continue their upward trend.The most recen

38、t data for October showed them rising to a strong monthly rate of 128,000.This was around 16%higher than a year earlier and flat on the previous month.The currently strong rate of growth year on year suggests that housing transactions and reservations should benefit from higher demand next year.Hous

39、ing transactions continue to follow the rising trend of mortgage approvals.Housing transactions in England and Wales continue to be at around the 150,000 level on a monthly basis.Figure 7.Mortgage Approvals and Housing Transactions,1991-06 Figure 7.Mortgage Approvals and Housing Transactions,1991-06

40、 9192939495969798990001020304050670080090010001100120013001400150016008001000120014001600180020002200MORTGAGE APPROVALSHOUSING TRANSACTIONS(R.H.SCALE)Source:DATASTREAM Source:DataStream UK Housebuilding UK Housebuilding 15 December 2006 Citigroup Global Markets|Equity Research 6 Given the recently s

41、trong upward trend in mortgage approvals it would not be a surprise for them begin to roll over some time in the first half of 2007.House price inflation House price inflation Having slowed to virtually zero in 2005,house price inflation has reaccelerated in 2006.House price inflation has been stron

42、ger than most commentators would have expected 12 months ago.For the housebuilders,it is currently running at between+4%-5%and higher in areas such as London.The use of sales incentives among the housebuilders has also reduced.They have become increasingly unnecessary as the market has continued to

43、strengthen.Although the new housebuilders continue to comment that the market remains competitive,net prices have been edging forward this year.Recent data shows house price inflation running at over 9%year on year.In 2007,we expect house price inflation to continue to moderate but remain in the low

44、 to mid single digits as the market continues to benefit from a sound economy and tight supply.However,affordability constraints are likely to prevent significant re-acceleration in house price inflation.Persistent house price inflation around the double-digit level is also likely to be a concern fo

45、r the MPC and therefore lead to pressure for higher interest rates.Figure 9.House Price Inflation,1990-06 Figure 9.House Price Inflation,1990-06 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06-10-505101520253035HOUSE PRICE INFLATION Source:DataStream Good momentum set to spill into 2007 Good mome

46、ntum set to spill into 2007 The outlook for 2007 appears encouraging with the good momentum of 2006 set to continue into 2007.We expect the housebuilders upcoming trading statements to be generally positive commenting on a good autumn trading season and sensibly cautious on the outlook for 2007.It i

47、s clear that London and the South-East have been stronger with higher house price inflation than other parts of the country.We expect volumes to continue to show year-on-year like-for-like growth and house price inflation in the 2%-4%range next year.Volume growth and house price inflation is likely

48、to slow due to a stronger comparative.The key determining factor governing the extent of a slowdown in growth next year is likely to be the extent of further interest rate hikes.Margins are likely to remain largely flat as build cost inflation and higher land costs offset the expected house price in

49、flation.Figure 8.Net Balance Current Use of Sales Incentives Figure 8.Net Balance Current Use of Sales Incentives-40-20020406080Jan-99Apr-99Jul-99Oct-99Jan-00Apr-00Jul-00Oct-00Jan-01Apr-01Jul-01Oct-01Jan-02Apr-02Jul-02Oct-02Jan-03Apr-03Jul-03Oct-03Jan-04Apr-04Jul-04Oct-04Jan-05Apr-05Jul-05Oct-05Jan-

50、06Apr-06Jul-06Oct-06 Source:HBF UK Housebuilding UK Housebuilding 15 December 2006 Citigroup Global Markets|Equity Research 7 Interest rate expectations going up,but by how much?Interest rate expectations going up,but by how much?A key risk to the outlook is that interest rates go up more than the m