Brick by brick the Brickworks Limited (ASX: BKW) share price has delivered for the company's shareholders so far in 2021.
Since the beginning of 2021, investors have been treated to the construction of a market-beating performance. Shares in the building products company have surged more than 27% higher, while the S&P/ASX 200 Index (ASX: XJO) has added ~9.7%.
The humble property investment and building materials business even dished out a record underlying net profit result this year. This was on the back of record property earnings as a result of a strong investor appetite for prime industrial property assets.
Taking all of this into account, I think we can chalk up 2021 as a win for Brickworks' shareholders. However, money is not made looking at the past. Let's take a look at how next year is looking for the Brickworks share price.
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Piggybacking the property boom
Brickworks is undoubtedly a beneficiary of the booming property market — both residential and industrial. An increase in residential building activity during FY21 boosted the company's building products division. While the hot housing market isn't expected to grow as fast in 2022 as it did in 2021, it's still expected to grow.
Importantly, senior economists at Australia and New Zealand Banking Group Ltd (ASX: ANZ) are tipping that the Reserve Bank of Australia won't raise rates next year. As a result, we could see capital city prices rising a further 6% next year. This bodes well for the Brickworks share price, as it indicates a potential driver for its building products.
Meanwhile, another important part of the company's operations is its property division — making up 19% of the group's assets. Positively, property agent Knight Frank shares a bullish outlook on industrial property for the year ahead.
In its 2022 outlook report, the Knight Frank team forecast further demand for prime industrial property next year. Commenting on this, the head of industrial research, Katy Dean said:
We are seeing multiple drivers put upward pressure on industrial rents, with the strong and sustained demand also pushing down vacancy of existing stock at a rate that developers are unlikely to be able to deliver new stock to address
In FY21, Brickworks' property portfolio increased dramatically, rising 89% to $204 million at the end of the financial period.
Analyst forecasts for Brickworks share price in 2022
Despite an incredible year — pending the remaining 14 days — some analysts are predicting further upside to the Brickworks share price.
For example, Ord Minnett has labelled the materials company a buy with a price target of $27.50. An expanding portfolio of attractive assets and increasing earnings has this broker enticed by the company's prospects.
Similarly, Citi sees an opportunity in the Brickworks share price. Analysts at the investment bank have come to the conclusion that the company could be worth $30 per share. This would suggest there's approximately 20% in gains still on the table.
