What’s the outlook for the Brickworks (ASX:BKW) share price in 2022?

Brickworks shares did well in 2021. What could happen this year?

| More on:
bull market encapsulated by bull running up a rising stock market price

Image source: Getty Images

The Brickworks Limited (ASX: BKW) share price has risen by around 30% over the past year, outperforming the S&P/ASX 200 Index (ASX: XJO) by around 16% over that same time period.

There are three (or four) different sections to the Brickworks business. It has an Australian building products division, a US building products division, a property trust investment and a shareholding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Each section has its own influence on the Brickworks share price and results. These are some of the recent comments from the company and analysts on the business:

The property division is expecting a big result

Brickworks is expecting to report record property earnings in the first half of FY22. Property earnings before interest and tax (EBIT), assuming no further transactions, is expected to be in the range of $290 million to $310 million. This compares to property EBIT of $253 million in FY21.

The COVID-19 pandemic has accelerated industry trends towards online shopping and increased the importance of well-located distribution hubs and sophisticated supply chain solutions.

Brickworks’ managing director Mr Lindsay Partridge said:

In order to meet the strong customer demand, development activity within the property trust has also continued at pace. At Oakdale West, construction of the start of the art Amazon facility is due to reach practical completion at the end of December. The completion of this facility, together with others at Oakdale South, will result in significant development profits, also included in the record first half earnings.

In the second half of the financial year, Brickworks is expecting to complete additional developments at the Oakdale Estates in western Sydney and the Rochedale estate in Brisbane.

Brickworks is also selling 75 hectares of excess land at Oakdale East, resulting in a “significant” one-off land sale profit and extending the development pipeline in order to meet the unprecedented demand for industrial development.

This is increasing the underlying backing for the Brickworks share price.

Building products

Several weeks ago, the business held its annual general meeting (AGM) and outlined how both of its building products businesses were performing.

In Australia, it said that it was experiencing strong demand, though the first quarter of FY22 was disrupted by COVID-19 restrictions. First quarter revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) was “slightly ahead” of the prior corresponding period. It said there is strong underlying demand across the country, with a large backlog of detached housing construction work in the pipeline.

In North America, sales have been buoyed by the recent brick distributor acquisition, though margin pressures remain. Thanks to the acquisition of the Illinois Brick Company (IBC), the sales uplift was “significant”.

Soul Pattinson

After the merger with Milton, Brickworks now owns 26.1% of Soul Pattinson.

Mr Partridge said:

The merger provides WHSP with increased scale, diversification and liquidity to pursue additional investment opportunities, and we expect WHSP to continue to deliver superior long-term returns and consistent dividend growth well into the future.

Is the Brickworks share price a buy?

Ord Minnett currently calls Brickworks a buy, with a price target of $26.20. Whilst the broker notes the ongoing performance of the property division, which is benefiting from higher valuations, the Soul Pattinson share price has been declining and hurting the underlying value of Brickworks shares over the last few months.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Tristan Harrison owns Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Real Estate Shares

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Real Estate Shares

Goodman share price charges higher on Q3 update and guidance upgrade

Goodman shares are storming higher on Monday morning. Here's why...

Read more »

A man sits at a desk holding a small replica house in his hand, upset at the sale of his property.
Real Estate Shares

Feel the squeeze: 3 ASX property shares with a whole lot of debt

When it comes to debt, it's the more the not-so merrier...

Read more »

two women stand at a computer smiling in a large factory with high shelves piled with goods, as though working in logistics.
Real Estate Shares

E-commerce is booming. Which ASX shares have exposure to warehouses?

Those products aren't going to store themselves...

Read more »

Rising real estate share price with a yellow arrow.
Real Estate Shares

This ASX All Ords share is bucking the sell-off to near all-time highs

One real estate player is outstripping the bunch.

Read more »

A white and black clock face is shown with three hands saying Time to Buy reflecting Wilson Asset Management's two ASX share picks in its WAM Research portfolio
Real Estate Shares

Here’s why the Brickworks (ASX:BKW) share price has loads of growth potential: expert

Brickworks shares have plenty of growth potential according to Ord Minnett.

Read more »

Houses with red declining arrow.
Earnings Results

Lendlease (ASX:LLC) share price tumbles on ‘reset year’ results

COVID-19 restrictions have hit construction projects across the world.

Read more »

A group of men in the office celebrate after winning big.
Real Estate Shares

Return to the office: Did this decision help boost ASX 200 property shares today?

Workers in NSW have been given the nod to head back to the office, with Victoria set to follow suit.

Read more »

A man in a blue collared shirt sits at his desk doing a single fist pump as he watches his Neometals shares rising on his laptop
Real Estate Shares

Merci! Here’s what’s driving the Unibail (ASX:URW) share price 7% higher today

The real estate company's shares are soaring. Here's why.

Read more »