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Hidden value at Inland Homes

Inland Homes sells land, builds homes and has a useful rental income stream. And its shares trade far below net asset value
August 18, 2016

If England's housing market is set to stall, then shares in Inland Homes (INL) are not attractive. We don't think that's likely, especially as mortgages are as cheap as they have ever been, while a raft of government incentives have made it less difficult to reach the first rung of the housing ladder. Meanwhile, Inland Homes has underlying merits that could make it a resilient performer anyway.

IC TIP: Buy at 63p
Tip style
Value
Risk rating
High
Timescale
Long Term
Bull points
  • Shares trade far below net asset value
  • Strong order book
  • Significant land bank
  • Rising rental income
Bear points
  • Delays in some completions
  • Hardly a yield stock

The company's original business model focused on buying brownfield sites, pushing them through the planning process and selling them to hungry housebuilders. This is still a key source of revenue, but Inland now builds houses for itself as part of a more flexible business model. So it may sell all of a consented site or just part of it, while the use of partners helps to reduce the burden on capital spending.

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