Brickability Group – getting the blocks together as it recovers its market, shares at 64p, brokers TP 100p

25.04.2025

It is encouraging to see that the Brickability Group (LON:BRCK) is getting its act together again after slipping back in its year to end-March 2024.

Yesterday’s Trading Update for the last year contained an upping in its Management Guidance for the current year.

That news helped the group’s shares rise 5% to 64p on the back of a massively increased dealing volume of 1.49m shares traded.

That rise continues the recent price recovery from its 52p low over the last year, compared to the 78p peak in May last year.

On the face of what I can see – this group’s shares could easily be up there again.

The Business

The £206m-capitalised group is a leading distributor and provider of specialist products and services to the UK construction industry.

Its business is made up of four divisions: Bricks and Building Materials, Importing, Distribution and Contracting.

With an agile, de-centralised, capital-light business model, supported by a strong balance sheet, Brickability leverages the skills of its people company-wide to effectively service the complex and evolving needs of the construction industry.

Founded in 1985, the group has grown organically through product diversification and geographic expansion, as well as through the acquisition of specialist businesses that support its long-term strategy for growth.

Today, the business encompasses a diverse portfolio of market-leading brands and a dedicated team of over 800 skilled professionals, led by a management team with deep-rooted knowledge and experience in the UK and European construction industries.

Pre-Close Trading Update

The group provided a pre-close Trading Update for the financial year to end-March 2025.

It reported that group revenue for that full year is expected to be some 7% higher at £637.0m (£594.1m).

That outturn reflects good momentum in trading throughout the second half of the financial year, notwithstanding subdued market conditions, and a strong final quarter in the group's Contracting Division where a number of projects, within its specialist cladding and fire remediation businesses, were delivered ahead of schedule and prior to the FY25 year-end.

For the year just finished, the group adjusted EBITDA is expected to be ahead of market expectations at about £50.0m (£44.9m).

Management Comment

CEO Frank Hanna stated that:

"The well-diversified revenues and strong profitability delivered in FY25 see the Group move into FY26 with an increasingly healthy financial position, and a business that is built for material growth as our end markets recover.

In that regard, we believe that further reductions in UK interest rates would assist positive momentum in housing starts and the RMI market.

At the same time, the Board remains vigilant of ongoing volatility in global capital markets and any potential impact on UK housebuilding.

We look forward to providing further detail on our recent progress in our FY25 results."

Broker’s View

Analyst Edward Stacey, at Cavendish Capital Markets, has a Buy rating out on the group’s shares, with a Target Price of 100p.

Noting the group’s strong finish to its 2025 year and the guidance, he increased his estimates for the 2025 year to £637.0m revenues, with adjusted pre-tax profits of £38.0m, worth 8.5p per share in earnings and paying a 3.6p dividend.

For the year to end-March 2026 he goes for £652.0m sales, £40.7m profits, 8.8p in earnings, more than double covering a 3.7p per share dividend.

Jumping even further ahead into the 2027 year he estimates £701.0m sales, £45.2m profits, 9.8p per share in earnings and a 3.8p dividend.

His view was that:

“The positive update comes despite continued subdued demand in UK construction materials, and we believe that Brickability is well-positioned to deliver substantial earnings upside once demand recovery becomes established.

Our price 100p target reflects strong medium-term earnings upside, a strong balance sheet position, and an attractive dividend yield.”

My View

I really like this business and consider that its shares, at just 64p, offer some very appealing upside potential, with a climb up to and above that 78p one-year High being a new easy Target.

(Profile 16.04.20 @ 39p set a Target Price of 55p*)

(Profile 25.04.25 @ 64p set a Target Price of 78p)

Asterisk * denotes that Target Price has been achieved since profile publication.