AIM-listed property developer Inland Homes (LSE: INL) fell this morning after the group issued a surprise profit warning. Full-year underlying pre-tax profit is now expected to be “marginally lower” than broker forecasts of £15.9m.
Inland says the cause of the problem is that a contractor employed on four of its housing sites went into administration during the year. This forced Inland to take over the completion of the sites itself. This delayed progress and completion of 23 properties has been pushed back into the current year.
However, today’s update also shows that Inland only sold 147 homes and 425 plots in the year to 30 June. This is a reduction from 248 homes and 440 plots during the previous year.
Although the number of homes sold in 2015 was distorted by a bulk sale of 59 units, these figures still suggest to me that the firm’s market in London and the south east may be slowing.
Inland does have a valuable land bank. The firm’s shares trade at a 25% discount to the last reported EPRA net asset value of 84.4p per share. But this discount is erased by the group’s net debt, which was £54m at the end of 2015.Â
I’d rate the shares as a hold until Inland’s next set of accounts are published.
Good progress towards a recovery?
A major profit warning in April caused smoke alarm firm Sprue Aegis (LSE: SPRP) to lose nearly half its value. The shares are still down by 48% so far this year.
But today’s update suggests Sprue’s recovery is going better than expected. Strong trading in June means the group now expects to report a first-half adjusted operating loss of £0.9m. This is significantly lower than the £1.9m operating loss that was forecast in April.
Shareholders will also be pleased that last year’s interim dividend of 2.5p per share will be left unchanged.
The company says that full-year sales are now expected to be £59m, slightly above current forecasts for £55m. Full-year operating profit is expected to be £1.9m. The firm’s recovery has been helped by a strong net cash balance. And while net cash has fallen from £22m at the end of last year to £14.7m, this buffer has enabled the firm to deal with exceptional costs without having to borrow money.
Overall, my view is that the current share price of 180p is about right.
Could currency profits soar?
Shares in currency manager Record (LSE: REC) edged lower this morning after the firm said that its assets under management equivalents (AUME) fell from $53.7bn to $53bn during the firm’s first quarter.
Although the performance of the firm’s investment strategies was mixed during the quarter, Record managed to increase the number of clients on its books from 58 to 61. AUME withdrawals by clients also slowed from $1.5bn during the previous quarter to just $0.1bn.
The growth outlook for Record appears slightly uncertain. But the company has an attractive 32% operating margin and generates a lot of cash. Based on the latest accounts, net cash accounts for around 15p of the current 25p share price.
On that basis, Record’s forecast P/E of 11.4 and prospective dividend of 6.2% could be a good buy for value investors.