Loss to date: 4% Orig­i­nal entry point: Buy at 299.4p, 10 May 2018

We re­cently up­dated on Ib­stock (IBST) af­ter a down­beat trad­ing up­date on 24 May where it blamed cold weather for a sub­dued start to 2018.

How­ever, in­vest­ment bank Beren­berg notes a key item of news in ri­val brick­maker Forterra’s (FORT) 22 May up­date which has positive im­pli­ca­tions for the sec­tor over the medium-term.

Forterra has an­nounced plans to build a new brick plant which would add 4% ca­pac­ity to the UK mar­ket.

Beren­berg com­ments: ‘As this plant is not ex­pected to be in full pro­duc­tion un­til 2022, we be­lieve it high­lights both the group’s and the in­dus­try’s positive view of the UK new-build hous­ing mar­ket.’

Brick mak­ers have sig­nif­i­cant pric­ing power thanks to strong de­mand from house­builders which is only be­ing met at present with the help of im­ported bricks.

Beren­berg re­it­er­ates its ‘buy’ rec­om­men­da­tions on both Ib­stock and Forterra with price tar­gets of 330p and 350p re­spec­tively.

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