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Déjà vu? The only question I have this year is not whether we should jump the gun now and buy into the sector in expectation of another profitable run up - I see no reason again to wait another four weeks given that I expect equity markets to continue their recovery from the growth scare in October - but whether the economic back drop is favourable enough to justify the risk? Mr Clare believes the Labour Party supports its conclusions and, if the party wins the election, is likely to focus on the affordable end of the market. In a perfect world, the government would fund local councils and housing associations, but given the country's high and growing indebtedness then the private sector listed housebuilders will have an important role too, according to analysts at Charles Stanley stockbrokers. In turn, this "implies a positive back drop for state land sales, and improvements in the planning approval process." If this scenario plays out, this would be good news for one of my other housing market plays, Aim-traded brownfield land developer and housebuilder Inland (INL:58.5p). And let's not forgot either why my favoured first quarter rally phenomenon occurs. Namely, the reporting season for housebuilders, which starts during late February and early March, guarantees investors a continuous stream of newsflow from the leading players (and generally positive news at that). Combine this with general media attention on the spring housing market (this is the time of year most of us prefer to move house), and we have the ingredients in place for further share price gains especially as investors remain focused on the potential for substantial capital returns as bumper land banks are converted into home sales.
Simon Thompson in the IC "As regular readers of my columns will be all too aware, I have a keen interest in stock market history. It pays to do so as over the years I have uncovered a large number of profitable stock market trends and ones that have the habit of repeating themselves year in, year out. One of the most reliable of which, and one that has clearly stood the test of time, is the tendency for the UK housebuilding sector to rally strongly in the first quarter each year. I first discovered the phenomenon while carrying out some quantitative research over a decade ago. At the time I noted: "On average, you would have made a healthy 8.1 per cent profit over the first three months of the year by investing in the housebuilding sector... and anyone possessing the Midas touch by calling the top in each of those first quarters would have made an average three-month return of 15.7 per cent since 1992." I also noted that the strategy was relatively low risk, because in "only two of the 12 years have produced negative returns". But once a trading pattern establishes itself, more often than not the profits made from following the trend can be quickly arbitraged away as more and more market participants become aware of it. It's therefore worth pointing out that the factors I identified driving the sector returns all those years ago are the same ones at work today. Moreover, if anything the trend has become stronger, rather than weaker, even though more investors are aware of the bumper gains to be made. In fact, the FTSE 350 housebuilders have delivered an average quarterly return of 11 per cent in the first three months of the year since 2004, rising 10 times and only falling once. This compares very favourable with the miniscule 0.5 per cent average return on the FTSE All-Share index in those years. And over the past 35 years since 1980, the sector's return has been 11.4 per cent in the first quarter, more than three times higher than the 3.3 per cent gain on the FTSE All-Share index.
http://www.everyinvestor.co.uk/news/2014/12/01/small-cap-inland-homes-provides-positive-update-10524/ WH Ireland, increases target price on Inland Homes to 80p Following a positive Annual General Meeting update from Inland Homes (AIM: INL), house broker WH Ireland has increased its target price to 80p. In the update the house builder announced 161 private housing completions on its sites with gross revenues more than double those achieved at the same point last year, at £38.4m (up 104%) for the year ended June 30, 2014. Forward sales stand at £30.2m of residential units reserved or contracted or being built to order. Additionally, at Drayton Garden Village, negotiations are now at an advanced stage with an institutional purchaser for the sale of 205 residential units for private rent. A 3.6 acres site has recently been acquired from the National Grid for a scheme of approximately 225 residential units and 30,000 sq ft of commercial space. In addition, completion of the purchase of a one acre site in Southall has also taken place which is suitable for approximately 50 residential units. The group currently has planning applications submitted for 545 residential units and 7,700 sq ft of commercial space across four sites. Its land bank has over 4,000 plots. Nick Spoliar, analyst at house broker WH Ireland commented in a note out today: “Our sum of the parts calculation for INL is well over 100p and today we raise our target price to 80p (70p). Buy.”
Loads of demand for these after yesterday's anomoly. WH Ireland sums of parts valuation? 100p Their target? 80p No brainer.
a lot of selling? I don't get short term movements with this share?!
Will help Inland Homes buyers. Over all they will pay less. More reason to buy and hold this.
me too, a lot of buying today!
Thanks :)
no idea. buy the rumour sell the news? What ev! Think medium - long term.
the analysts at the agm asking questions will be satified by the answers and then go back to their fund managers and accumulation will start. Also, I expect this to be mentioned again by OC now and also re rated by the brokers. 70p is way too cheap. This will target 100p in the first 4 months of 2015.
The Board of Inland Homes, the specialist housebuilder and brownfield land developer, provides the following statement ahead of its Annual General Meeting to be held today, 1 December 2014 at 11.00am. The Group has achieved 161 private housing completions since 1 July 2014 of which 94 units were at our development in Ashford, Middlesex. These completions generated gross revenues of £38.4m and are significantly ahead of the 114 completions achieved for the year ended 30 June 2014 with gross revenues of £18.8m. Forward sales stand at £30.2m in respect of residential units reserved or contracted or being built to order. Additionally, at Drayton Garden Village, negotiations are now at an advanced stage with an institutional purchaser for the sale of 205 residential units for Private Rental purposes. A 3.6 acres site has recently been acquired from the National Grid for a scheme of approximately 225 residential units and 30,000 sq ft of commercial space. In addition, completion of the purchase of a one acre site in Southall has also taken place which is suitable for approximately 50 residential units. The Group currently has planning applications submitted for 545 residential units and 7,700 sq ft of commercial space across four sites. Since 1 July 2014 planning consents or resolutions to grant planning permission have been received on five sites for 393 residential units and 205,000 sq ft of commercial space. In addition, the Company has made representations on seven strategic sites for the delivery of up to 1,500 residential homes and made pre-application submissions on six sites for 892 residential homes. Following the withdrawal of the Judicial Review of the Ministry of Defence's decision to sell the Wilton Park site in Beaconsfield, excellent progress is being made at the site, with planning consent now received for the first leg of the relief road. Inland Homes continues to secure excellent land opportunities with the land bank currently in excess of 4,000 plots. Stephen Wicks, Chief Executive, commented: "The expansion of our housebuilding activity continues to progress well, in line with our expectations, and it is very pleasing to report the successful completion of 161 private housing units already this financial year. "Market conditions in the south and south east of England, where we primarily operate, remain strong. Our land bank continues to grow, we have a healthy pipeline of opportunities and remain confident of growth in the land bank and its underlying value."
Yes, an excellent set numbers, these will really rally now for the rest of the year well into Q1.
First Target 5800p
In line with both FinnCap and W.H. Ireland.
On a price-to-book value basis, Inland’s equity is being valued on 1.67 times historic net asset value, but if land were marked to open market value then the company’s equity is trading far nearer book value. That’s because Inland has a record 3,734 plots in its land bank, of which 1,316 has planning permission and the rest is being brought through the value enhancing planning process. Indeed, its land portfolio includes a potential bank of 620 plots across six long-term strategic sites that have been secured at a discount to their open market value. And if a low price-to-book value and modest earnings multiple are not compelling enough reasons to buy Inland shares, then there is scope for the board to step up its progressive dividend policy. Having more than doubled the payout to 0.6p a share in the last financial year, finnCap forecasts a 50 per cent rise to 0.9p a share in the financial year to June 2015, increasing to 1p a share in fiscal 2016. On this basis, the prospective yield is 1.7 per cent. Add to that a benign environment for house price growth in the regions, buoyed by low unemployment and record low mortgage rates, and prospects look very attractive for the business. In fact, to reflect the profit upside from the Chapel Riverside project, I have raised my conservative target price to 70p, in line with both finnCap and W.H. Ireland. Needless to say, I continue to rate Inland shares a strong buy
Purely from a technical perspective, if the 55p level can now be taken out – a significant high dating back to the autumn bull market of 2007 – then the post Aim-listing spring all-time high of 62p is the next realistic target. This neatly coincides with my 60p long standing target price. Realistically that could prove too conservative given the real momentum and potential for value creation in the business. Indeed, the company’s latest land deal, and one announced at the tail end of last week, will see Inland develop the 8.9 acre Chapel Riverside site in Southampton in a joint partnership with the site’s owner, Southampton City Council. This is the second site Inland is developing in the city, having acquired a seven acre site that was the former Meridian television studios in May this year. The Chapel Riverside project has a development value in excess of £70m for the creation of 350 homes and 6,500 square metres of commercial space subject to planning consent. A planning application will be submitted in the second half of next year. Southampton City Council will retain ownership of the land, so don’t expect Inland to earn the same profit share percentage terms that the company enjoys on its Drayton Garden Village project in west London, or on its Wilton Park project in Beaconsfield. But it is lower risk as the capital tied up in the project is far less. Furthermore, even if Inland only manages to replicate the 27.5 per cent gross margin made from its open market completions last financial year, the profit uplift could be substantial given the scale of the Chapel Riverside development. Interestingly, there is potential for Inland to pursue other similar structured deals in the future as analyst Duncan Hall at finnCap points out: “This is another example of how Inland can use its development expertise to lock into future earnings and employ a funding model clearly attractive to public authority land-owners, which could be replicated.” Low rating drives re-rating In the circumstances, it’s hardly surprising that the shares have burst through the 50p glass ceiling as they are hardly highly rated for their projected earnings growth profile. To put this into perspective, Mr Hall predicts EPS will rise to 4.7p for the 12 months to June 2015, up from 2.87p in the prior financial year and 1.98p in fiscal 2013. And without factoring in any contribution from the Chapel Riverside project, Mr Hall is pencilling in EPS of 5.5p for the year to June 2016, implying a doubling of post tax earnings per share over the next two financial years. On this basis, the shares are priced on a forward PE ratio of less than 10 for the 2015/16 fiscal year.
Good for you Iceguy, I saw your trade on L2.
I don't want to say how many exactly but somewhere between 150,000 and 200,000 shares.