Orchid has blossomed from a 224-room, four-star hotel on the shores of the Black Sea to a diversified property developer. A second hotel was opened last year, part-way through the season, and both are fully booked by international operators for the coming season.

Joint chief executives Guy Meyohas and Ofer Miretzky, who have development experience in Israel and the Czech Republic, expanded Orchid by buying up land adjacent to its first hotel. Now the company has moved into residential, commercial and retail development in Bulgaria.

Phase one of a residential development on the hills overlooking Sofia is well advanced, 110 out of the 320 luxury apartments have been sold. A project for the building of 450 apartments plus retail space on the Black Sea is underway. The Porsche Business Centre in Sofia has been completed and will open this month, with 50% rented or in advanced negotiations.

‘But 70% of our land is still to be developed – that’s the hidden value in the company,’ says Meyohas. ‘We have around 400,000 square metres of “rights to build” land,’ he adds, after three purchases in the period topped up the land bank by around 75%.

A pre-tax loss of Euro1.2m (£0.8m) for 2005 was in line with expectations. Company broker Shore Capital estimates that Orchid’s discounted net asset value has ‘increased significantly’ from the 83p per share valuation at the time of the IPO last July and now represents ‘a material premium’ to the present share price.

With Bulgaria set to join the EU in 2007 and its property market remaining in rude health, with commercial yields estimated at around 9% and office rentals projected to increase, this doesn’t look too volatile an investment. Buy.