The Brickworks Limited (ASX: BKW) share price dropped quite a lot in September, it's down 12% since 12 September 2023.

It's a leading building products business, with a number of brands including Austral Bricks, Austral Masonry, Bristle Roofing, Southern Cross Cement, Bowral Brickworks, Daniel Robertson, Nubrik, GB Masonry, UrbanStone, Terracade and Capital Battens.

The business recently reported its FY23 result, so let's look at that first.

Earnings recap

It said that in the 12 months to 31 July 2023, total revenue rose 8% to $1.2 billion, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 26% to $784 million, underlying net profit after tax (NPAT) declined 32% to $508 million.

The business is suffering from higher energy costs, labour costs and softening demand for building products.

Brickworks' board decided to declare a final dividend per share of 42 cents (up 2%), taking the overall full-year dividend to 65 cents per share (up 3%).

The business noted that while there was a lower earnings contribution from its investment in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), it provided higher dividend payments and a "significant uplift" in the market value of Soul Pattinson.

Brickworks noted that its property division generated EBITDA of $506 million – while this was down 21% on last year's record earnings, it was the second best ever. The company's $301 million sale of the second stage of Oakdale East into the industrial joint venture trust "was a highlight" for the year.

The property trust assets were revalued during the period, leading to a net profit of $112 million. There was a "significant increase" in the assessed market rent for the leased assets which more than offset an increase in the average capitalisation rate across the portfolio.

Brickworks said that it also recorded a development profit of $78 million – its real estate is worth more with a completed warehouse on the land.

Thanks to rental income growth, net trust income improved 37% to $50 million.

The business helpfully provides a breakdown of its asset values with each of its results, which it calls its inferred asset backing.

Brickworks said that at 31 July 2023, it had an inferred asset value of $5.7 billion, which translated into $37.47 per share.

Those numbers included net debt of $652 million, $384 million of development land, $579 million of building products net tangible assets (NTA), the property trust NTA of $2.27 billion and its listed investments in Soul Pattinson and FBR Ltd (ASX: FBR) worth $3.1 billion.

The Soul Pattinson share price is close to where it was at the end of July 2023, so I think the Brickworks asset backing hasn't changed much.

If we take the $37.47 inferred backing at face value, the Brickworks share price is valued at a discount of close to 33% of its underlying value.

Soul Pattinson continues to invest in further growth of its portfolio. The industrial property trust continues to complete buildings, unlocking more rental profit and funding bigger dividends. I don't know when the construction environment will improve, but I think at some point it will.