Ready to drive home value
Helma Eigenheimbau provides an opportunity to gain entry into a growth company in a positive phase for the sector, at a time when home ownership is getting government encouragement. Federal government is responding to a recent decline in home ownership to 51.9%, versus 53.4% five years ago, by providing incentives, which along with low interest rates and population growth provides a favourable backdrop. The shares declined a little further after the results for 2016 were released in early March and have fluctuated between €38 and €40 since then. They are still below the 12-month peak levels but up 4x from the 2012 low point. The company issued guidance recently (23 February 2017) that lowered the expected rate of growth in 2017-18 to around 10% pa for revenue and earnings; the share price reaction was overly harsh, in our view.HELMA Eigenheimbau AG is a Germany-based company that specializes in design and construction of new private residential buildings and houses. The Company diversifies its activities into three business segments: building services business; property development business, and Other. The main area of operations of the building services business encompasses the planning and construction management of detached and semi-detached houses on the basis of customer orders. In the property development business, constructions are realized and marketed on the Company's own land. The Other business segment comprises the broking business for building-related financing and insurance. As of December 31, 2011, the Company had three wholly-owned subsidiaries: Hausbau Finanz GmbH, HELMA LUX SA, and HELMA Ferienimmobilien GmbH. It also held a 93.95-stake in HELMA Wohnungsbau GmbH.
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