Investors in the housing sector, for so long one of the dullest in the market, have never had it so good as they have over the past three years. A combination of low interest rates, rising house prices, land shortages and corporate activity have all contributed to a complete re-rating of the sector.
Berkeley Group reports interim results on Friday and if broker UBS has it right the company should confirm pre-tax profits of £80m. Although that is a slight decrease on the same period of 2005, it takes into account a £1.45bn return of capital to shareholders between 2004 and 2011.
Berkeley bought the 50 per cent it did not previously own of St James Group, a joint venture with Thames Water, for £191m in September, and investors will be looking for an increased contribution from that part of the business. The company's land bank, exclusively in London and the South-east, is widely thought to be the best in the sector and as a result takeover speculation has been rife in the last few months.
But punters hoping for a bid should bear in mind that management already has a private equity-style incentive programme in place depending on successful completion of the capital repayments. Any predator would therefore have to dig very deep.
TODAY: The marketing and communications group Creston is considered a rising star in a highly competitive sector and its inclusion in the FTSE Small Cap index, which should be confirmed this week, ought to open up the company to more institutional investors. House broker Panmure Gordon is looking for a 65 per cent jump in full-year pre-tax profits to £7.7m, and although there are no first-half forecasts investors will be looking for solid progress towards that number.
Results: Full year - Aberdeen Asset Management; Hardride. First half - Acal; Creston; E2V Technologies; I-Mate; Vp.
TOMORROW: Carluccio's has been one of the stars of the restaurant industry over the past four years. Since it came to the market just over a year ago the shares have added more than 50 per cent, relying on strong cash flow to achieve its growth plans without taking on any debt or flooding the market. The company told investors in early October that results would be better than forecast. Broker Altium Securities is looking for good contributions from new premises in Brighton, Chiswick and Richmond, along with full year pre-tax profits of £4.1m.
The utility sector has been one of the hottest in the market this year, mainly thanks to private equity's thirst for infrastructure assets. Severn Trent and United Utilities are both expected to report strong numbers and investors expect bid speculation to continue. Goldman Sachs expects United to report an 8 per cent jump in first-half operating profit to £404.3m, and a 3 per cent rise at Severn to £290.2m.
Strong results last week from Wolverhampton & Dudley - pre-tax profits up 11 per cent - have put the heat on Greene King. Shares of the East Anglia-based brewer and pub landlord stand at an all-time high of 1,052.5p. Unless the company can match W&D, the shares could come under some pressure.
Results: Full year - Caretech Holdings; Carluccio's; Greencore; ITE Group; Victrex. First half - Carclo; Christian Salvesen; Cybit Holdings; Focus Solutions; Glotel; Greene King; Halma; Severn Trent; Stonemartin; Ten Alps; United Utilities; Universal Salvage.
WEDNESDAY: British Energy looks certain to drop out of the FTSE 100 in the final quarterly reshuffle of the year. It has been hit hard by cracked pipes that led to a shutdown at two of its nuclear reactors, and the company told investors a fortnight ago that the Hinkley Point B and Hunterston B power stations will not operate at full capacity until March 2008. Barring any disasters in the next three days, the fund management group Schroders should regain its spot at the top table.
A busy week for water companies concludes with numbers from Northumbrian Water, the UK's smallest independent water company. Broker Deutsche Bank expects the company to report operating profits of £63.6m for the first half.
Results: Full year - Alternative Networks; ATH Resources; Sanderson Group. First half - Biffa; DS Smith; Jarvis; Northumbrian Water; Vega Group.
THURSDAY: Results: Full year - First Choice Holidays; OMG; Pursuit Dynamics. Computerland UK; Premier Farnell; Wagon.
FRIDAY: Results: First half - Berkeley Group.Reuse content