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Go Ahead for Marina Development at Holyhead Waterfront. Buy at 89.125p with a 145.5p target price

Conygar Investment Company (Conygar), the AIM listed real estate investment and development group, announced on 6th June that the Isle of Anglesey County Council has resolved to grant planning permission for its marina development at Holyhead, Anglesey in Wales. The project is a joint venture between Conygar and Stena Line Ports Limited, called Conygar Stena Line Limited.

This will be a mixed use, large scale development that will include the construction of:

· 326 apartments and townhouses

· A 500 berth marina

· A 50,000 square foot flexible development providing retail, leisure, restaurant, hotel and office space, all of which is marine related and overlooking the marina

It is expected the project will bring much new investment to the area, helping to make the surrounding community more sustainable. Further, public access is a key element of the development, and many provisions built in to the development should assist local amenities and visitor attractions. As a result, all stages of the development, from construction to operation, should create a range of employment and business opportunities. In addition, a number of historical listed buildings along the waterfront should be put back into use by this development.

It is hoped that the development of the marina should enhance the profile of the entire town, attracting more visitors and improving Holyhead’s reputation as a holiday destination. Ultimately, this should lead to further redevelopments in other parts of the town. This includes:

· Regeneration of further listed structures along the waterfront

· An extension of the existing Promenade and the creation of a new beach to the east of the new marina

· Regeneration of and improved access to public spaces

· Formation of partnerships with local businesses and attractions, such as the Breakwater Country Park, to provide benefits to the wider community

While the Isle of Anglesey County Council has resolved to grant planning permission, this resolution is still subject to a number of relevant planning conditions, and the signing of a S.106 agreement to make the terms of the development legally binding.

Valuation

Shares in Conygar are currently trading at a 43.6% discount to NAV, which is significantly wider than our selected peer group. All peer companies have exposure to the UK property market, and two of them, LXB Retail Properties and A&J Mucklow Group PLC, actually trade at a premium to NAV per share.

Table: Peer Group Comparison

Company	Share Price (p)	NAV (p)	(Discount)/Premium	Dividend (p)	Dividend Yield
Conygar	89.125	158	(43.6%)	1.1	1.23%
London & Stamford I	111.8	116.7	(4.2%)	7	6.26%
LXB Retail Properties II	114	111	2.7%	0	0.00%
Max Property Group III	106.5	130	(18.1%)	0	0.00%
IRP Property Investments IV	66.25	79.9	(17.1%)	7.2	10.87%
St. Modwen Properties V	166	232	(28.4%)	3.1	1.87%
A&J Mucklow Group PLC VI	360	306	17.6%	18.21	5.06%

Notes: I NAV as at 31st March 2012, Dividend as at 31st March 2012

II As at 31st March 2012

III NAV as at 31st March 2012

IV NAV as at 31st December 2011, Dividend as at 30th June 2011

V NAV as at 30th November 2011, Dividend as at 30th November 2011

VI NAV as at 31st December 2011, Dividend as at 30th June 2011

The average discount of the six peer companies is 7.9%, and if we apply this discount to Conygar’s shares we get a value per share of 145.5p – our new base case target price. We believe the group has continued to add value to its portfolio despite tough trading conditions, through active portfolio management and development. We feel this announcement adds further weight to our argument, as the company is now one step closer to the implementation of a project that could provide significant future returns. We retain our stance of Buy at 89.125p with a 145.5p target price.

Financial Records Table

Year to 30th September	Sales (£000)	Pre-tax Profit (£000)	Earnings Per Share* (p)	Price Earnings Ratio** (x)	NAV (p)	Discount to NAV** (%)
2008A	9,375	(103)	(0.89)	N/A	163.8	45.6
2009A	16,468	13,688	31.51	2.8	139.5	36.1
2010A	18,515	14,878	11.57	7.7	150.5	40.8
2011A	13,010	1,761	0.98	90.9	155.2	42.6

Notes: * Diluted Earnings per Share

** Based on share price of 89.125p

Key Data
EPIC	CIC
Share Price	89.125p
Spread	87.25p – 91p
NMS	3,000
Total no of Shares	100.15 million
Market Cap	£89.26 million
12 Month Range	84p – 117p
Market	AIM
Website	www.conygar.com
Sector	Real Estate Investment
Contact	Robert Ware Chief Executive Officer 020 7258 8670