The Brickworks Limited (ASX: BKW) share price is underperforming the S&P/ASX 200 Index (ASX: XJO).
Brickworks shares are down 1.5% in November 2021, whilst the ASX 200 has gone up by 1.9%. Whilst 3.4% underperformance is not that much, it is a noticeable for just a two-week period.
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What may be influencing the Brickworks share price?
Brickworks is a large shareholder of the investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
Changes of the share price of Soul Patts then changes the underlying net asset value of Brickworks.
Soul Patts shares have declined 3% since the start of November 2021 and it's down 10% in the last month. The investment conglomerate has declined more than 20% from 28 September 2021.
Brickworks recently gave a presentation at the ASX CEO Connect on 12 October 2021. It noted how much of the overall inferred asset backing the Soul Patts shares were. Of the total Brickworks net value of $4.84 billion, the Soul Patts market value was $3.41 billion.
For completeness, other assets made up the rest of the value. Its 50% share of the industrial property trust had a net asset value of $911 million. Its building product operations have net tangible assets of more than $1 billion. The business also has $519 million of net debt.
Brickworks also noted that its building product asset value includes land, both operational and surplus, with a market value that is "significantly higher" than book value.
Do analysts think the Brickworks share price is good value?
Analysts are somewhat mixed on the business. There are a few neutral/hold ratings on the business.
For example, Morgans currently rates Brickworks as a hold with a price target of $25.72. The broker thinks that Brickworks' property division is going to have a good FY22 and that building products can continue to go through a recovery.
However, there are others that are more positive. One of the most bullish is Citi, with a price target on the Brickworks share price of $30. Analysts at Citi are also positive on the building product markets in both Australia's key markets and the US. Property is also a positive for Citi.
Expectations of property growth
Brickworks says that it's currently undergoing a period of unprecedented development within the property trust, fuelled by structural tailwinds that are driving "strong demand" for prime industrial property.
The completion of pre-committed developments over the next two years will result in an uplift of around 60% in rent and leased asset value, from the current level.
Management said that the new property developments are increasingly sophisticated, incorporating features such as robotics, automation and multi-storey warehousing. The development of these advanced facilities has become a critical competitive advantage for many businesses in the new economy and "will continue to support the increasing value of the property trust".
One of the current large projects is the new, huge Amazon facility in Sydney at its Oakdale West estate.
When Brickworks released its FY21 result, it said that in addition to the pre-committed developments, a further 227,900 square metres of gross lettable area (GLA) is available for development within the trust, and this provides further opportunity for growth in the years ahead. This may be able to assist the Brickworks share price in the future.
