British Land Company Plc

British Land Company Plc (LON: BLND) is a London-headquartered property company which focuses on mixed-use places. The real estate group is engaged in owning, managing, developing and financing a portfolio of commercial properties, focused on retail locations around the country and increasingly multi-use places in London.

The group will announce its full-year results of 17 May 2020.

Covid-19 Update
On 26^th March 2020, British Land Company released an update on the impact of Covid-19 on business performance. The group is focused on ensuring the health and safety of its employees, their families and its assets. The company as on 30 September 2019 has divided its assets by value to London offices with 55 per cent, retail with 41 per cent and Canada Water & Residential with 4 per cent share. The Government announced new measures on 23^rd March 2020, and all the company’s stores are open to provide access to essential commodities except one at Valentine, Lincoln is closed. The group has released a few of its small-scale customers from rental obligations from April to June and resulted in the financial impact of around GBP 3 million. The company has also decidedto defer March quarter rents from other customers facing challenges due to Covid-19 and repayment is spread to more than six quarters from 2020 September. The March deferrals are expected to be around GBP 40 million across the group. The group has a robust balance sheet with Revolving Credit Facilities of GBP 450 million. The company, with its GBP 1.2 billion in term of cash and undrawn facilities, doesn’t need any refinance until 2024. The board has decided to temporarily suspend dividend payments for the future.For the year ending 31st March 2020,the Group’s underlying earnings were in line with the expectations; however, the group did the independent valuation of its assets and identified material uncertainty.

Share Price Performance

Daily Chart as of April8^th, 2020, after the market close (Source: Thomson Reuters)

British Land Company Plc shares were trading at GBX 386.40 at the time of writing after the market close on 8^th April 2020. Stock's 52 weeks High is GBX 649.40 and Low is GBX 309.40.

Valuation Methodology

*Peers: Intu Properties Plc, Land Securities Group Plc, Derwent London Plc and Hammerson Plc

Conclusion
While the London office market was healthy during the period, retail segment remained challenging, with no sign of improvement in the short run as structural change continues to persist. In the UK, the consumer sentiment remained subdued, and business confidence remained fragile and declined overall, as the ongoing Brexit process dominated the economy. In London, because of the reduced demand from overseas buyers, the market for prime and super-prime continues to be challenging, and development starts continuing to be pushed back. With the outbreak of Covid-19, the group’s assets have been impacted as identified in independent valuation and group has decided to release small scale customers from rental obligations and for other postponed the rent for March quarter which will impact the financial performance as well. The group has a robust balance sheet with adequate liquidity to tackle the challenging situation.

Based on the headwinds faced by the group, we have given a "WATCH" recommendation at the closing price of GBX 386.40 (as on 8^th April 2020), while we look for any upcoming catalysts in the near term.
 

MJ Gleeson Plc

MJ Gleeson Plc (LON: GLE) is United Kingdom-based company, which is involved in providing two businesses: strategic land trading, mainly in the South of England and house building on brownfield land in the North of England.

The group will release its trading update in July 2020.

Covid-19 Update
On 6^th April 2020, MJ Gleeson released an update on the impact of Covid-19 on business performance. The group has taken multiple steps to reduce the risk of an outbreak. The group’s456 employees are part of the Job Retention Scheme started by Government. All Board members taking reduced fees and salaries of 30 per cent and Senior management are taking reduced salaries depending on salary bands between 5 per cent to 20 per cent. The group hasdecided not to pay any dividend payments, paused all activities related to land acquisition and building, reducing optional costs and freezing recruitment activities and taking decisions to become well-positioned when operations restart once the condition stabilises. The group is focused on opening sales offices, sites and re-start operations efficiently without any delay once permission of trading is granted. The board continue to monitor the situation and are taking the required steps to tackle the situation.

Share Price Performance

Daily Chart as of April8^th, 2020, after the market close (Source: Thomson Reuters)

MJ Gleeson Plc shares were trading at GBX 636.00 at the time of writing after the market close on 8^th April 2020. Stock's 52 weeks High is GBX 1,010.00 and Low is GBX 512.00.

Conclusion
The company delivereda good performance with decent revenue and operating profit in Homes divisions. Demand stays robust, with January reservations per site increase by 5 per cent on the previous year. The company see no signs of this subsiding.The homes segment continues to remain extremely affordable, and mortgage finance remains smoothly available. The company have a demand for consented sites and a significant pipeline in place, from both large and medium-sized developers, stays very high. Presently, one of the major risks that the global market is facing is from Coronavirus (COVID-19) outbreak. The company’s operations are impacted by the outbreak of Covid-19, as all the construction activities are on hold and sales offices remained shut until allowed to resume trading activities by the government. The group is taking multiple steps to enter the position to restart its operations effectively without any delay once the situation stabilises. 

Based on the above rationale, we have given a "HOLD" recommendation at the closing price of GBX 636.00 (as on 8^th April 2020).

*All forecasted figures and peers information have been taken from Thomson Reuters.

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