Henry Boot-138.5p

Henry Boot has an excellent long-term financial record and the 2007 results, showing significant increases in pre-tax profits, earnings per share and net asset value, have continued this trend, despite the challenging market conditions.

The group has a strong balance sheet and is looking to increase its investment portfolio and reduce its dependence on sales of developments, although these will always be important.

The group has a high quality land portfolio which stands in the books at cost and it is estimated that net asset value would be close to 300p per share. At current levels the shares look very good value.

Following the sale of its housebuilding and other non-core businesses in 2002/03 the groups operations are now split into Property and Land Development and Construction. The Property and Land Development side of the business produced a good set of results and is well placed for another good performance this year and should take advantage of signs that Government actions and initiatives will release more land for planning consent.

Since the year end the company has sold a 325-acre site in which it had a 30 per cent stake to a housebuilder. Other highlights include a sale of a site in Ripon to the food retailer Morrisons, and a number of other projects are ongoing.

The construction section of the business works in both the private and public sectors and seeks to develop partnership, negotiated and framework contracts.

Last year, it was involved in a major social housing refurbishment project with Doncaster Council and further schemes continue with other councils. This division also has a plant hire business and has a contract to maintain the A69 between Carlisle and Newcastle.

In the year to the December 31, 2007, pre-tax profits increased by 14 per cent to £46.6m helped by valuation gains and development sales, and earnings per share rose by 24 per cent to 24.5p.

Property and Land Development operating profits (before central costs) rose by 22.5 per cent to £47.3m. Despite the challenging trading environment, construction activities also made good progress and operating profit remained unchanged on the previous year of £7.6m.

These latest results are very impressive given the challenging market and were helped by the fact it has a broad portfolio of assets and activities.

Looking ahead, its strategic land bank has considerable unrealised profit once the relevant planning consents have been obtained and this should help underpin the share price.

Given that the share price has fallen over recent months, this has left the shares on a p/e ratio of only 5.8x and represent long-term investors with an excellent buying opportunity.

WARNING: Opinions expressed are the writers' judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.