Peel Hunt starts Countryside Properties at 'buy'

It said Countryside provides investors with an opportunity to invest in the specialist growth area of Partnership housing in London and the North West.

“This business is differentiated, generates a very high return on capital employed and has significant barriers to entry. We also expect its traditional housing business to double profits in the next two years,” the brokerage said.

It noted the Partnership housing business has a low capital footprint and significantly lower risk than traditional housing businesses due to the nature of contracts with local authorities, where Countryside has established long-standing relationships.

High barriers to entry have delivered margins not that far below sector averages which in turn drives impressive returns on capital, Peel said.

“With a growing pipeline of secured contracts, we are forecasting a c70% increase in revenue and a c90% rise in operating profits in the next three years.”

Peel added that Countryside was set to grow revenues and profits significantly in the next three years, comfortably ahead of the sector average.

At 0945 BST, Countryside shares were up 1% to 237.45p.