HSBC cuts British Land as political concerns weigh on property stocks
British Land is likely to see its valuation under pressure for the foreseeable future, said HSBC on Monday, downgrading the property developer and cutting its target price.
British Land Company
389.00p
11:49 24/04/24
FTSE 100
8,088.34
11:50 24/04/24
FTSE 350
4,445.00
11:50 24/04/24
FTSE All-Share
4,398.95
11:50 24/04/24
Real Estate Investment Trusts
2,237.36
11:49 24/04/24
The bank, which cut its recommendation on the FTSE 100 stock to 'hold' from 'buy' and the target price to 678p from 738p, saw large UK property companies such at British Land as "particularly prone" to hits from UK economic and political events.
"This has resulted in an entrenched p/book discount for much of the sector in anticipation of returns now turning negative — as our estimates continue to indicate."
The cut in the target price reflects analysts' forecast of a sustainable free cash flow yield of 5.3% for the 2018 financial year and a price/book discount of 22% versus its full year 871p net asset value per share forecast, "which is not bad value".
"However, the large UK-proxy property companies are particularly prone to UK-centric economic and political events, which has evidently left them devoid of any re-rating impetus, underscored by a declining UK GDP growth trajectory," they wrote in a note to clients, moving to a lower rating "until there is more discernible directional evidence".