Been watching this little company for a while, and was interested to see it tipped in Shares as a play for the coming year.

The potential profit of 15-20million for the Swaylands development of luxury homes over the next 2 years is very exciting.

Company is currently valued at only 11million. Doing the sums, if profits can reach that 20million in 2 years, a reasonable p/e ratio of 10, would push this company towards a valuation closer to 100-200million.

Next years p/e of 2.5 is cheap. Throw in a potential takeover recently announced by the board.

PRESS RELEASE


27 August 2004


Honeygrove Group plc

Rule 2.10 Announcement


In accordance with Rule 2.10 of the City Code on Takeovers and Mergers, the
Company confirms the details of its relevant securities are as follows:


Share Class Number in Issue ISIN reference
Ordinary shares of 10p each 123,110,430 GB0009238519



Enquiries:

Jasper Allen Insinger de Beaufort Tel. 020 7377 6161


- ends -


This press announcement has been issued by Insinger de Beaufort on behalf of
Honeygrove Group plc

Insinger de Beaufort is a subsidiary of Bank Insinger de Beaufort. Regulated by
the FSA

The above takeover related press release was released after closing today.

Price has been choppy today, but it looks like this takeover story has got some truth behind it.

Next week looks interesting.

I've copied the land bank details from the website below:


"Land bank and Development sites


The Company's land bank and development sites are owned by, and developed by, its wholly owned subsidiaries Propan Properties Ltd. and Honeygrove Properties Ltd.

The following is a schedule of the property portfolio of Propan Properties Ltd and Honeygrove Properties Ltd, with links to the pages in the "Newhomes" section of our website which provide full details of the site and development plans / progress. Opening the link will create a new page in your browser; close the page to return here.

Ashford, The Birches:
GDV 2,120,000.
Caistor, Caistor Place
GDV to be assessed.
Carisbrooke, Isle of Wight, Gatcombe Valley:
GDV to be assessed.
Faversham, Waterside:
GDV 1,665,000. XCHD 290,000.
Faversham, The Old Dairy:
GDV 160,000, U/O 160,000..
Hildenborough, Oak Hurst Manor:
GDV 3,900,000.
Knockholt, Homevale Cottages:
GDV 100,000.
London, Kensington, Iverna Gardens:
GDV 9,260,000, U/O 425,000.
Maidstone, Fairmeadow:
GDV to be assessed.
Maidstone, Malling Terrace
GDV 1,200,000
Penshurst, Swaylands
GDV 48,000,000.
Purley, Monkey Puzzle Gardens:
GDV 1,145,000, U/O 495,000.
Sevenoaks, Summerhill Court:
GDV 499,500.
Tunbridge Wells, Post Office Square
GDV 2,824,000, U/O 799,000.
Tunbridge Wells, Regency House
GDV 870,000.


GDV = remaining Gross Development Value, ie. total estimated selling prices when development completed less sale proceeds received.
U/O = under offer.
XCHD = contracts exchanged"

The Swaylands "Gross development value" is marked at 48million. This company would appear to have a lot of development ahead.

IMHO, any takeover would surely be at a higher value than todays price.

TSQ M. Walters recommended these a month or so ago. Theres a good right up and thread on his web site.

Volume still up. Interesting to see how takeover story pans out.

RAB Capital own 24% of the equity at 10pence and have further warrants to subscribe for stock.

IMHO an offer would need to be considerably higher than the current price, given the development potential in the South-east of England.

How high do you think they could go, short term?

Always difficult to predict short term. It's probably fair to assume that if a bid doesn't materialise, the price may drift lower again.

However, bid aside, the development pipeline for this company can deliver profits as far out as 2007 and beyond, perhaps 10-20million of profits. At a conservative p/e of 10 say, you could be looking at a valuation closer to 100million in 2years time, roughly 8-10times the current level.

Ofcourse, this is all merely my opinion, but if this company maintains a good 'hopper' of new development lands coming on stream then the above estimates might prove conservative on a 2-3year view.

Chart looking positive. Takeover story has further to play out but could also be seen as a distraction to the bigger picture.

The 48million Swaylands development is the big game in town. The land bank in the South East is impressive.

Earnings should be well supported over the coming 4 years.

Check out the website.

http://www.pphweb.com/

This thread should be closed - HYG is now a different trading company.

It is part of the stupid Confusion that the LSE perpetuates instead of moving to 4-character EPICs for all new companies.....thereby giving us about 25 times as many Codes as we have at present...
Dozey so-and-so's.