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If the directors really want to see progress on the SP following the welcome news in the RNS today then all they need do is to start buying. Its been a very long time since they have shown the faith.
Mispriced value play I feel that investors are being too cautious in their valuation of Inland Homes (INL:57p), a specialist housebuilder and brownfield land developer. After I included the shares in my 2013 Bargain Shares portfolio at 23p ('How the 2013 Bargain Shares fared, 7 February 2014), the price rose almost fourfold to an all-time high of 89p at the start of last year. However, since then it has given back almost half those gains and is below the 61p level at which I last recommended buying, pencilling in a target price of 80p at the time ('Taking profits and running gains', 4 April 2017). The recent lacklustre share price performance can be attributed to investor caution over the company hitting analyst profit estimates for the 12 months to end-June 2017. Analysts John Cahill and Miranda Cockburn at broking house Stifel predict a pre-tax profit of around £17m, up from £14.9m the previous year. Inland reported recurring pre-tax profits of £4.4m in the first half to end-December 2016, well below the annual run rate embedded in those estimates, largely due to the timing of land sales which can be lumpy due to their very nature. However, at the time of the half-year results at the end of March, the directors appeared confident that they could make up the shortfall and even sanctioned a 25 per cent increase in the half-year dividend to 0.5p a share, supporting analyst predictions of a full-year payout of 1.6p a share, up from 1.3p a share in the 2016 financial year. Bearing this in mind, and coming just days before its financial year-ends, Inland reported recently that it had sold off two parcel of land with planning consent for 85 affordable homes for a total of £9.5m and has entered in construction contracts with the purchasers to build the units over the next 15 to 18 months. The company has also exchanged contracts to sell a refurbished listed building at one of those developments, Queensgate, Farnborough, for £1.95m. These disposals have generated free cash flow of £8m after paying down borrowings, and add £1m to EPRA net asset value (NAV). Embedded in Stifel's aforementioned full-year profit forecasts are expectations that Inland will sell 240 private homes at an average price of £300,000 and at a gross profit margin of 20 per cent; and sell a total of 500 plots at an average price of around £105,000 from its land bank of 7,151 plots, of which more than a third have planning permission. In the first half, private residential home sales were steady at 101 units, but, more importantly, the housebuilding division's forward order book stood at £31.8m, up 52 per cent year on year, highlighting potential for a strong second half. So, although we will have to wait until the company issues its pre-close trading update on or around 23 July to see whether Stifel's forecasts have been met, if Inland was going to miss them the directors had the opportunity to say so recently. It goes
I wish the market would wake up to the progress management is making. IC reckoned these shares to be worth 80p months ago and they have drifted ever since then!
When does Stefan and other new board members intend to become shareholders? We would all like (indeed expect) this commitment in return for the salaries they take.
Check out the spread in price.
The directors now need to weigh in and buy in support of their own strategy.
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I'm on the Island and the properties in the EHG are busy. No "facts" to support this but an observation on the ground. Added flights from LHR, Manchester and Brum providing good numbers of tourists on the ground. Plenty of Canadians around as well. Let's hope EHG is benefitting. Daphne's was hard to get into.
Next Fifteen Communications saw pre-tax profit rise 50 per cent to £24.2m ($30.1m) in the year to 31 January, boosted by growth in the US and higher margins elsewhere, and aided by acquisitions and favourable exchange rates. Chairman Richard Eyre: organic growth, acquisitions and exchange rates helped performance Full-year revenue at UK-listed Next 15 - which owns PR shops Bite, Lexis, Text100 and The Blueshirt Group - rose 32 per cent to £171m ($212.6m) after the group made four acquisitions in the period, including tech PR agency Pinnacle and content marketing business Publitek. Growth was 10 per cent on an organic basis. Underlying earnings (EBITDA) rose 51 per cent to £29m ($36.1m). (Figures exclude factors such as acquisition costs and other charges). Significant clients wins in the period included LinkedIn, GM and KPMG. The company described 2016 as "a period of exceptional progress across the group", adding that it had made a "good start" to the new financial year with "encouraging signs across our brands". Next 15 chairman Richard Eyre said: "The results for the financial year to January 2017 were helped by forex [foreign currency exchange movements], but reflect strong organic growth, judicious and effective acquisitions and continued organisational efficiencies in an entrepreneurial culture. Current trading reassures the board that the outlook for Next 15 continues to be positive." Net debt rose from £6.6m ($8.2m) to £11.4m ($14.2m) in the period, although Next 15 said its balance sheet remained "healthy", citing its debt-to-earnings ratio. Acquistion costs totalled £21.6m ($26.9m). Regional breakdown Revenue in the US rose 28.1 per cent to £107m ($133.1m), with organic growth of 12.6 per cent. Profit margin exceeded 20 per cent, although it was hit by the performance of its newly acquired ad agency Story Worldwide. "M Booth and Beyond US have had impressive performances whilst OutCast, Connections Media and Bite US have continued to deliver solid results," Next 15 said. The company said a "series of operational improvements" led to higher operating margin outside the US. "We have improved the efficiency of a number of our UK businesses whilst acquiring high-growth, high-margin agencies in Publitek, Pinnacle and Twogether." UK revenue grew 52.7 per cent to £42.6m ($53m), with adjusted operating profit more than doubling to £8m ($10m) and adjusted operating margin increasing from 13.6 to 18.9 per cent. Next 15 said there was an "improved trading performance" in EMEA as it continued to focus on "markets of potential scale". Revenue rose 11.5 per cent to £7.2m ($9m) and operating profit increased to £0.6m ($0.8m) at an improved operating margin of nine per
I've never sure that a mainstream builder would know what to do with them. There is a strong entrepreneurial streak at INL and as the founders would move on in the event of a sale - that would present a barrier to purchase. However I have held these for 4 years and when I retrace the increase in stock as I've reinvested the dividends - I am not sure I care!
This morning's RNS shows that INL remain focussed on their strategy and are delivering in spades. I am wondering if this is going to stretch cash though - but other than that the pipeline is best described as "rich". The company is going to be worth an awful lot more as time moves on. It remains under valued. Good news and I am sure the interims next Tuesday will show our company going from strength to strength.
28th March
Does anyone know the date?
#shabby all round.
Yes, the delay is gnawing away at me too. In past years its been as early as January. One can only hope that they are saving up some good news. Hope is not a word I like to use in relation to investments.
I can only agree GT. Fact is that the Board cannot buy anything else with the PTCM stock, they have no cash and they can't borrow anymore. The story that by selling you were getting in on the ground floor worked for a while. But of course the stock is now not on the third or fifth floor, it's in the basement which anyone selling will have spotted! So the only alternative is to burn cash on hiring. No argument with that strategy but if correct any gains from new business and the currency swing will be absorbed by the new hires. I just wish the Board would treat their (our) own business to some decent PR. As I have said here before its the Cobbler's children story. Shameful that they cannot devote some resource to this. Anyway - jam tomorrow!
Hard not to agree, they are not showing the faith we all are.
Some mates work for the Group and indeed, as you say, some intel can be garnered from following social media. Also I know some of their competitors and the feedback is that Porta are winning and retaining some good clients. They are sure recruiting like mad. Lets hope they are controlling those staff costs - some of those guys don't come cheap. You say lack of trades is not a worry but the stock won't move unless the story is told. We need buyers. Newgate et al do it for clients but it seems to be the cobbler's children syndrome. Agree on loan cost. Bloody loan sharks would be cheaper.
GT, thanks for that. Yes we all agree this should be the year that Porta sorts itself out. The fundamentals are all good and I understand trading is pretty good. But the story is just not being told by the Group, a crime for an IR/PR firm, and the lack of trades is almost embarrassing. The brokers clearly think its a problem child. Until the Board put their hands in their pockets and buy and/or reschedule the debt then there will be little or no action. The Board can't say they are in a closed period for ever! I worry too about Red Leaf - the sale of Porta stock by the leaders, why and when they did has never been explained. Its 3 years almost to the day since the Daily Mail had Porta as a pick of the year with a target price of 21p. I bloody wish!