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Housebuilder Glenveagh to deliver 1,000 new homes by 2020, says Davy

Company broker begins coverage on Glenveagh Properties with an ‘outperform’ rating

Davy said that despite its promising start to life as listed company, it believed that Glenveagh is still “attractively valued”

Glenveagh Properties, which raised €550 million from its initial public offering (IPO) last month, is expected to “deliver rapid growth and impressive financial returns,” according to Davy, a broker to the company.

Initiating its coverage of the company with an “outperform” rating and a price target of €1.36, the stockbroker said Glenveagh was part of a small group of housebuilders who have the financial and operational capacity to deliver new homes at scale.

Glenveagh debuted last month at €1 per ordinary share, with the stock trading at €1.17 in Dublin on Friday morning.

Davy said Glenveagh was “a well-capitalised and proven housebuilder that is coming to the market at the right time.”

“In the short term, the company can scale rapidly to deliver 1,000 units by 2020, confirming it as a key benefactor of the rapidly-recovering Irish residential market,” Davy analysts Colin Sheridan and Michael Mitchell said.

“Importantly, its already-established financial and operational advantage can propel Glenveagh to deliver 2,000 units by 2023. At that stage, the true earnings and returns potential of the company will be unveiled.”

Davy has forecast operating profits of €64 million in 2020, rising to €171 million by 2023.

Glenveagh was created through the combination of assets of US private equity firm Oaktree Capital and Maynooth-based builder Bridgedale. It floated in early October with 1,700 “shovel ready” units and intends to build at least 1,000 homes a year by the end of the decade.

Davy said that despite its promising start to life as a listed company, it believed that Glenveagh was still “attractively valued” given that it is currently trading at an adjusted discount of 24 per cent to its closest peer, Cairn Homes, which is listed in Dublin and London.

It is led by executive chairman John Mulcahy, chief executive Justin Bickle and Stephen Garvey, its chief operating officer.