This report is an updated version of the report published on 28 September 2022 at 07:15 AM GMT+1.

Section 1.0. UK Homebuilding Sector Landscape, Trends & SWOT Analysis

The UK Homebuilding Sector mainly comprises of private homes, construction of new building, and renovations to existing buildings. The prevailing housing shortage is a major catalyst that drives demand. Adjacently, supportive Government policies accelerates the market further. As per the Office for National Statistics (ONS), UK average house prices surged by 15.5% over the year to July 2022, up from 7.8% in June 2022. The average British house price was £292,000 in July 2022, which was £39,000 higher than this time last year. Nevertheless, the near-term outlook can be challenging as the Homebuilding sector is likely to face pressure from higher interest rates, rising inflation, rising input material costs, labor shortages and supply chain snags.

Section 1.1. Trends in the Retail Sector

Section 1.2. SWOT Analysis

Section 2.0. Sector Risks & Opportunities

Section 2.1. Risk Exposures to Retail Sector

Section 2.2. Retail Sector Outlook

In the year 2020-2021, UK housebuilders witnessed a pent-up demand on the back of stamp-duty holiday, limited supply, and lower mortgage rates. However, market started to slowdown in the year 2022 due to labour shortages, increasing borrowing costs, Brexit impact, supply chain challenges, among others. In a nutshell, the sector which remained resilient during the pandemic has faced a choppy ride in the current year so far. As per recent government’s mini budget announcement, stamp duty has been cut (a second reduction to the stamp duty tax in two years), which shall keep the market buoyant. It can lure first-time property buyers and can elevate house prices further. Adjacently, robust demand for new houses is likely to outstrip supply, and thus, order book of homebuilders shall remain solid.

Section 3.0. Barratt Developments PLC (Buy at GBX 360.30, closing market price of 27 September 2022)

3.1 Company Details

3.2. Key Metrics in Pictures

3.3 Valuation and Technical Guidance

(Source: REFINITIV, Analysis by Kalkine Group)

Section 4.0: Springfield Properties PLC (Speculative Buy at GBX 100.00, closing price as on 27 September 2022)

4.1 Company Details

4.2. Key Metrics in Pictures

4.3 Valuation and Technical Guidance

(Source: REFINITIV, Analysis by Kalkine Group)

Please note markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 28 September 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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