Davy Research

Building products

Near-term challenges to negotiate but UK brick sector has the flexibility to prosper
Building products
Geberit | Forterra plc | Ibstock plc | Wienerberger | SIG plc | Saint-Gobain Group

DAVY VIEW

The likely downturn in construction activity has put the remarkable turnaround of the UK brick industry at risk. However, our analysis of the sector suggests that it has the structure, discipline, flexibility and experience to withstand near-term pressures. In particular, we expect the industry to actively align capacity with demand. The scrutiny that the public market brings with the IPOs of Ibstock and Forterra will support industry discipline and a focus on returns rather than margins. From an equity market perspective, both stocks sold off aggressively following the Brexit referendum. Both are trading at very modest valuations, even if a sharp downturn in profitability is assumed in 2017. Our favoured pick is market leader Ibstock, which brings concentrated exposure at a reasonable valuation as well as greater balance (and opportunity) via its US operation.

Download full report with analyst certification and important disclosures
Download
Download full report with analyst certification and important disclosures
Download

Analyst(S)

Building products

JUMP TO