Under the guidance of charismatic chief executive Michael Slade, Helical has built up a pounds 550m development programme that is the envy of the industry. This seems a big step for a company capitalised at less than pounds 100m. But Helical has mitigated the risks by taking on a large number of smaller schemes and pre-selling most of the sites to institutions keen to invest in direct property. And it has shown over the past 10 years that it can consistently spot a good deal.
Its investment portfolio is also well placed to cash in on the property upturn. It has been quick to take advantage of the strong London market by selling industrial property and piling into City offices. This fleetness of foot should stand it in good stead.
On the downside, the 1 per cent increase in stamp duty for larger property transactions announced in last week's Budget and rising interest rates are bad news for the industry. But this won't be enough to strangle the market recovery. The removal of tax credits on dividends will also make property a relatively more attractive investment for pension funds and life assurance companies than equities.
Given that Helical has a large chunk of convertible preference shares its net assets should be valued on a fully diluted basis. Net assets for the year to March rose to 372p (330p). Credit Lyonnais Laing forecasts net asset value of 445p this year, putting the shares on a prospective premium to net assets of 15 per cent. But that ignores the value of the development portfolio not reflected in the balance sheet.
Even on conservative estimates the profits from this investment will add at least 100p to net assets per share. Helical's shares, up 16p to 513.5p yesterday, still offer sound value.Reuse content