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March 29, 2021, 10:42 a.m. EDT

JPMorgan says U.K. builders to benefit from government support and solid demand as Grenfell costs partly priced in

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By Steve Goldstein

The valuation of U.K. home builders likely already includes the impact of a roughly £2 billion levy for cladding remediation following the deadly Grenfell Tower fire, a leading broker said on Monday.

Analysts at JPMorgan say there are 465 buildings with a cladding system used on Grenfell Tower that will need replacement, citing data from the U.K. government. Of those, 52% have completed remediation, and the government estimates 85% of identified buildings will have completed remediation works by the end of 2021. Another 1,400 buildings using a different cladding system also may need remediation.

The total cost may lead to a 2% to 4% higher tax rate for 10 years. But the analysts say this is partly discounted already and unlikely to be a major concern, as they highlighted the government’s continued support for the sector and solid demand trends. The analysts upgraded Taylor Wimpey /zigman2/quotes/208623755/delayed UK:TW +0.89% to overweight from neutral on the belief earnings momentum will outperform the sector, while downgrading Barratt Developments /zigman2/quotes/209812640/delayed UK:BDEV +1.23% to neutral from overweight after a strong run.

Separately, analysts at Jefferies upped Crest Nicholson /zigman2/quotes/207992108/delayed UK:CRST +2.39% to buy from hold and lowered Bellway /zigman2/quotes/208360300/delayed UK:BWY +0.95% to hold from buy. “With an arguably more robust housing market post-COVID (in terms of desires to buy a new home, the return of house price inflation) we believe the cheaper [small to midcap] housebuilders offer increasing attraction,” they said.

Crest Nicholson shares rose 3% and Taylor Wimpey rose 1%. Barratt Developments fell 1% and Bellway fell marginally. Persimmon /zigman2/quotes/206444744/delayed UK:PSN +1.28% fell 2%.

The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.04% slipped 0.2% afternoon trade, with the index largely inoculated from the forced liquidation of Archegos Capital Management, having neither lending banks nor the fund’s top holdings in the index.

Engineering group Renishaw /zigman2/quotes/200921567/delayed UK:RSW -0.17% rose 6% as Bloomberg News reported it has attracted interest from Danaher /zigman2/quotes/210555154/composite DHR +1.57% and Hexagon /zigman2/quotes/203909320/delayed SE:HEXA.B +3.40% .

/zigman2/quotes/208623755/delayed
UK : U.K.: London
169.30 p
+1.50 +0.89%
Volume: 10.20M
Dec. 8, 2021 4:35p
P/E Ratio
12.74
Dividend Yield
4.89%
Market Cap
£6.11 billion
Rev. per Employee
N/A
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/zigman2/quotes/209812640/delayed
UK : U.K.: London
741.00 p
+9.00 +1.23%
Volume: 2.24M
Dec. 8, 2021 4:35p
P/E Ratio
11.58
Dividend Yield
3.97%
Market Cap
£7.47 billion
Rev. per Employee
£760,262
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/zigman2/quotes/207992108/delayed
UK : U.K.: London
360.00 p
+8.40 +2.39%
Volume: 529,710
Dec. 8, 2021 4:35p
P/E Ratio
15.74
Dividend Yield
3.42%
Market Cap
£902.68 million
Rev. per Employee
£1.03M
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/zigman2/quotes/208360300/delayed
UK : U.K.: London
3,281.00 p
+31.00 +0.95%
Volume: 271,771
Dec. 8, 2021 4:35p
P/E Ratio
10.39
Dividend Yield
3.58%
Market Cap
£4.01 billion
Rev. per Employee
£1.07M
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/zigman2/quotes/206444744/delayed
UK : U.K.: London
2,855.00 p
+36.00 +1.28%
Volume: 556,419
Dec. 8, 2021 4:35p
P/E Ratio
11.54
Dividend Yield
8.23%
Market Cap
£8.99 billion
Rev. per Employee
£637,483
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,337.05
-2.85 -0.04%
Volume: 0.00
Dec. 8, 2021 5:47p
loading...
/zigman2/quotes/200921567/delayed
UK : U.K.: London
4,688.00 p
-8.00 -0.17%
Volume: 46,708
Dec. 8, 2021 4:35p
P/E Ratio
30.61
Dividend Yield
1.41%
Market Cap
£3.42 billion
Rev. per Employee
£121,664
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/zigman2/quotes/210555154/composite
US : U.S.: NYSE
$ 318.26
+4.91 +1.57%
Volume: 2.22M
Dec. 8, 2021 4:03p
P/E Ratio
40.41
Dividend Yield
0.26%
Market Cap
$223.91 billion
Rev. per Employee
$322,957
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/zigman2/quotes/203909320/delayed
SE : Sweden: Stockholm
kr 139.80
+4.60 +3.40%
Volume: 4.95M
Dec. 8, 2021 5:29p
P/E Ratio
10.82
Dividend Yield
0.68%
Market Cap
kr364.79 billion
Rev. per Employee
kr1.93M
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