Investec initiates coverage of Glenveagh Properties with ‘buy’ rating

Dublin-based analyst Investec has initiated research coverage of Irish-listed homebuilder Glenveagh Properties with a 'buy' rating and a price target of €1.28.

Following Glenveagh’s initial public offering (IPO) in September, its shares have risen by 15.5 per cent and it currently trades at €1.17. According to Investec, it is well placed to quickly scale its output considering its current land bank could provide up to 3,500 new homes.

This level of building would go some way to helping with Ireland’s chronic housing shortage, which is driving “strong price growth”, according to the report’s authors, Owen Callan, Philip O’Sullivan and Ronan Dunphy.

Investec puts the Republic’s housing shortfall down to the “lack of a well-capitalised, equity-funded homebuilder with ambitions. and the financial capability, to aggressively scale output”.

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Glenveagh, prior to its IPO, had agreements in place to acquire 27 residential sites. Following the purchase of those sites, Investec estimates that it has around €430 million in net cash for land acquisition and development purposes.

As a result, Glenveagh, of which 16.5 per cent is owned by Oaktree Capital, is targeting annual output of 2,000 properties by 2023, thereby making it one of the largest homebuilders in Ireland.