Thursday preview: Opinions divided on Barratt Developments

13th Jul 2011 16:10

House builder Barratt Developments issues a pre-close period trading update on Thursday ahead of its preliminary results, which are due for release on 14 September.Panmure Gordon is expecting the company to report "a robust performance during 2011 from both a pricing and completions point of view," but then the broker is bullish on the stock."We believe that sales rates since January have been broadly stable at the business, whilst prices have continued to improve on mix. Net margins have also continued to improve as the benefit of new, higher-margin land works its way through the system," the broker said.In Panmure Gordon's view, the threat of a share issue that would dilute net asset value (NAV) is receding. "We see no ongoing financing issues at the business and therefore no risk of NAV dilution from new money. Write-downs look highly unlikely, against a stable pricing environment," it opined. Giving a contrary view is Peel Hunt, a long-time bear on the sector, not just Barratt.The broker thinks Barratt will be singing a familiar tune, "namely that demand is solid, prices are robust and the market is on the cusp of an improvement.""We would expect a great deal to be made of the market in London and the latest political manoeuvrings to shore up the market, which Barratt is always eager to embrace," Peel Hunt said, while adding that there is a danger that "Barratt's London exposure blinds investors to the wider risks of a national, volume house builder.""London is a positive but ... the question must be whether London residential is some kind of brave new world or just the latest asset du jour. We fear the latter, although there is doubtless good money to be made from closing out developments already in progress," the broker continued. "We see so much money wanting to invest in new schemes in London that overbuild is a risk, and with office-to-residential potentially to prove very popular, the sheen could very quickly come off this market. One should pay very close attention to Berkeley's deceleration of new investment in London," Peel Hunt believes.INTERIM DIVIDEND PAYMENT DATEAI Claims Solutions, Hargreave Hale AIM VCT 1QUARTERLY PAYMENT DATEYamana Gold Inc.INTERNATIONAL ECONOMIC ANNOUNCEMENTSMachine tool Orders (JPN)ECB Monthly Budget Report (EU0 (09:00)Consumer Price Index (EU) (10:00)Harmonised Index of Consumer Prices (EU) (10:00)Business Inventories (US) (13:30)Continuing Claims (US) (13:30)Initial Jobless Claims (US) (13:30)Producer Price Index (US) (13:30)Retail Sales (US) (13:45)Bloomberg Consumer Confidence (US) (14:45)Retail Sales Inventories (US) (15:15)GMSMission Capital, Wynnstay PropertiesFINALSSports Direct InternationalANNUAL REPORTDS SmithIMSSAssociated British FoodsEGMSKazakhGold Group Ltd. GDR (Reg S)AGMSAlterian, Biotech Growth Trust, Burberry Group, Chalkwell Investments, Hamworthy, Mothercare, Nature Group, Octopus AIM VCT, Telford Homes, Wynnstay Properties, ZamanoTRADING ANNOUNCEMENTSAshmore Group, ASOS, Barratt Developments, Mothercare, RSM Tenon GroupFINAL DIVIDEND PAYMENT DATEAlliance Pharma, Chamberlin, Young & Co's Brewery 'A' Shares--jh