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Cautious on Countryside
Countryside Properties (CSP) 355.2p
Gain to date: 18.1%
Original entry point: Buy at 301.2p, 25 May 2017
A strong recent run for Countryside Properties (CSP) has helped it close the gap on the wider sector we identified when adding the shares to our Great Ideas portfolio in May 2017.
Although we continue to like the business the backdrop looks more uncertain as house prices began to stall and amid reports the Government will withdraw the Help to Buy scheme earlier than expected. This initiative has been very supportive to the housebuilding sector.
As we discussed in our initial article on Countryside its activity supporting housing associations and local authorities to regenerate public land provides some insulation from a wider downturn in the housing market.
However, on balance we think it is worth booking some profit ahead of what could be a more difficult second half to 2017 for the housebuilders. The valuation case is now less compelling for Countryside. It trades on 10.4 times the September 2018 earnings per share forecast by investment bank Berenberg, roughly in line with its peers.