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21 Oct 2020
Trick or treat? In for a treat in the UK Q3 season
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Trick or treat? In for a treat in the UK Q3 season
- Published:
21 Oct 2020 -
Author:
Bromehead Yves YB | Roger Paul PR -
Pages:
21
Better momentum in UK construction markets should drive consensus earnings upgrades
The consistently cautious tone during the H120 results season of most UK construction companies on H220 trends could prove to be too pessimistic given construction markets have gained momentum, opening the door to a likely positive Q320 trading update season. Travis Perkins kicks off the season on the 22nd October.
Building renovation is the Q3 season treat
The RMI/DIY markets have been robust throughout the summer as indicated by the UK retail sales and read-across from the construction industry. The stamp-duty holiday, resilient housing transactions and house prices should help to support the medium-term outlook for the renovation sector.
New housing activity could be the real surprise
The UK''s leading housebuilders are much more optimistic on the shape of the recovery and the outlook for the housing sector than our UK brick coverage. Barratt''s strong housing completion outlook in 2021 implies consensus upgrades for Ibstock and Forterra are on the horizon.
TPK: Near-term value creation from portfolio recycling?
Stronger Q320 activity and improved near-term visibility could lead management to provide an update on its planned demerger of Wickes and the divestment of the PandH division, in turn leading investors to look again at the potential value creation from this strategy.
UK bricks: A brighter outlook - Upgrade Forterra to Outperform
Housing construction is showing signs of life again, with recent trends and industry feedback suggesting the recovery is more pronounced than expectations. Ibstock and Forterra are likely to surprise positively. Our increased volume expectations in Q320/H220 and in 2021 is the major driver of our earnings upgrades. We upgrade Forterra to Outperform on the back of a stronger UK residential outlook both near- and medium-term.