Inland Homes Share Discussion Threads

[fegger] 07/9/2022 13:04

Longer term in this business area dont assume that housebuilders will automatically get the benefit of the uplift in value of land when they get planning permission. Liam Halligan the economist (now GB News presenter)wrote a book outlining among other things how the benefit should go to the local councils who have to provide all the increased services etc for the increased population as is done in many other countries. I know the housebuilders have donated to the Tories a lot. But Liam was actually in discussions with Sajid Javid about his proposal before Javid left the Chancellorship. It could be tempting to reduce central government spending to councils in these economically difficult times. I am not going to invest in any more housebuilders as I see it a s a real prospect in future from a government of any party makeup

[eezymunny] 07/9/2022 11:04

My point oi oi is that the assets (in their various stages of planning/devt) are, on paper, valud much much higher than the market cap. Yes, the ongoing losses are nibbling away at TNAV but not in a terminal way. Only massive write-downs would threaten solvency IMO.

Seems to me this is an invite to big builders, to buy decent assets at a knockdown price, and for the acquirer to sort out the operational stuff.

As I say risk/reward looks somewhat favourable here to me, but the final outcome will swing around with a lot of big and unpredictable variables...

[cc2014] 07/9/2022 11:00

The challenge for INL is the level of debt. All their debt is due for renegotiation in the next 2 years acoording to the half year report. Unless anything has been done since then.

With base rates rising from 0.1% to a predicted 4% by middle of next year, that's going to put an extra cost into the business. Also, given the bad news yesterday and the breach of covenant it's going to be more far more than 4%.

They have an urgent need to sell assets and reduce the debt, but then they face an economies of scale problem as they shrink the business.


As an aside the first set of bad news is not usually the last. It's the one when the Board first start to get a grip on things. I suspect there will be more to come. And what's that receiveables write down all about? That's not stuff they've built but not sold they are writing down, but stuff they've invoiced they are writing down. Seems a bit concerning.

[oi_oi_savaloy] 07/9/2022 10:07

Something further to add - they'll be offering all completed units on their sites to RSL's (registered social landlords/affordable housing companies)/buy to rent companies, in fact anyone that can bulk buy, for a discount, to bring cash in before the year end. They need to feed the machine now - what they wont be doing is holding out for the very best price for each of their completed units.

There will be deals to be done on the houses too but they don't tend to sell to bulk-buyers....but if you've got cash and can transact quickly.....they'll be deals to be done (even if it's not so much a reduction in price but perhaps the internal specification of the house is significantly increased - better carpets, better specified kitchens and bathrooms, better quality tiling etc etc - perhaps a fully fitted garage with airlines/tool cupboards etc etc). Those types of specification packages are marginal costing to the business and easily offered, compared to giving a discount off the price.

They need certainty of income to take to the banks now and that translates into unconditional exchanges (the completion can take place post-year-end as long as the unconditional exchange has taken place.)

It won't be a fire-sale as such (as they can't afford to drop things too much) but anyone with money and an ability to transact should be approaching them imo.

[solarno lopez] 07/9/2022 09:43

Always good to read your post Oi Oi

[oi_oi_savaloy] 07/9/2022 09:33

Eezy - it's an asset play yes but with a massive issue attached because there's the main-contracting business still bleeding money each day it's operated by Inland.

Price inertia will be almost certainly affected by the ongoing working capital requirements of the other parts of the business.

It's a proper mess and no mistake.

Anything that they've got in planning too, is a shambles, because they can't put a date on things (as they've admitted in that rns). We can't (at our company) and I bet if you called every other developer with planning applications in the system right now they'd give the same answer. 'We don't know when we're going to get planning'.....

Sorry to sound pessimistic but we're pulling our hair out on a couple of applications that have taken way longer than they should have.... and have still not been determined.

If somebody came in and offered 30p a share I wouldn't be surprised if it was accepted.

but who knows. If that land deal goes through for £75mill then that might make the business more attractive. But we don't know if that £75mill represents the best site(s) within the portfolio. Perhaps the rest of the landbank is a 10 year timeframe away from getting planning. We don't know.

[eezymunny] 07/9/2022 09:25

All these comments and opinions are rather missing the point IMO.

This is, for now, an asset play. The big thing is to ask how much are the assets actually worth IMO. Not easy to answer. You need to write everything down by 40-50% in order to lose money here. That might happen. Or it might not.

Risk/reward perhaps tilted in the buyers favour for now, but a tough tough call IMO.

[oi_oi_savaloy] 07/9/2022 08:12

Totally agree Graham. I've nothing to add to your comments above, apart from the fact that I always felt their Hugg Homes concept had merit (and decent cash flow, for a relatively modest initial outlay of the units).

Perhaps there's a way to expand that (or sell it). It'll be a drop in the ocean but nevetheless, every bucket is needed when baling out is the priority.

In terms of land sales - it is what it is - they've got to get that debt down. Bearing in mind anyone looking at the land bank isn't thinking profit....they're thinking a) how much is it going to cost to get planning on all of it, b) how long with that take and c) what's the risk profile (in terms of planning) for the various sites and d) why didn't Inland capture planning on the land bank if it was that good?

I'm still curious as to why they've not told us too about the site they sold in Hitchin (old Weston's car and commercial site). It's a factual sale (I know the retained agent that sold it). Inland got the planning and owned 30% of the site. Exchanged and completed on the same day early last month.

[scepticalinvestor] 06/9/2022 16:39

Good grief total bargepole this.Good luck poor shareholders

[cerrito] 06/9/2022 16:23

I noted their comments on the planning system and of course in tneir case many of the aplications will be complex.
The only other house builder I currently have shares in is Bellway and in their Aug 8 TU they commented on the complexities of the planning system. Do not know about the other house builders.

[cielos] 06/9/2022 16:16

>>>>>> gripfit 06 Sep 2022 12:23 ---- I gaurantee I will buy cheaper


You never said which year, for sure not today

[yf23_1] 06/9/2022 16:04

Got it,
BUY @56 14 Jan
SELL @39 8 JUL

[yf23_1] 06/9/2022 15:58

Anybody know what the last Simon Thomp recommendation on INL was ?

[gripfit] 06/9/2022 12:23

I gaurantee I will buy cheaper

[daicaprice] 06/9/2022 11:50

I also dipped a toe in @18p, let’s see how it unfolds.

DC

[babbler] 06/9/2022 11:34

Well I went long at 18p and over ask was paid. lol

[george stobart] 06/9/2022 11:26

is there a dead cat bounce incoming? should we wait for a dead cat to dump our shares?

[little beaker] 06/9/2022 11:11

Ahaha, fantastic share buyback strategy guys. Love it!

[geckotheglorious] 06/9/2022 10:32

Wskill
"if they cannot make money in a house price boom"

Isn't such reliant on permitting and planning consent not being dragged out then put on hold due to Nimbyism?

[wskill] 06/9/2022 10:22

Not too sure INL are much good at the housebuilding game reading the last results if they cannot make money in a house price Boom they will never make money.

[geckotheglorious] 06/9/2022 10:17

c3479z
Yes let's put it in context.

UK infrastructure was built to service 50- 55 million.

Population of UK in 1997 - 58.3million


Population now - 68 million
Net inflow 250,000-275,000 per year STILL

How many new power stations built?
How many new reservoirs?

This is why we have the problems we do - we are overpopulated in UK but especially in England where the majority of us live

We have be governed by idiots for far too long and the current situation isnt sustainable.

See Power cuts this Winter!
In a first world country!

[c3479z] 06/9/2022 10:04

to put it in context:
150 000 died with Covid,
there may be 1000 coming on boats each day but a far greater number arrive through airports and stay on, I would guess,
many EU citizens returned to their countries after Brexit and employers are complaining all the time of a shortage of labour, so how does it all add up?
Even if Inland had the capital to develop its sites in Hillingdon and Hounslow, a shortage of grid capacity, due to the number of datacentres opened along the M4 corridor would presently be an impediment, that's the sort of country in which we live!