Orchid Developments

Flourishing Bulgarian property developer Orchid has expanded its land bank and is excited by a number of potential opportunities.

Of future prospects, chief executive Guy Meyohas is particularly thrilled about Orchid’s moves into retail development, saying ‘the beauty of it is that retail is unexplored in Bulgaria’. A 150,000 square metre Western-style mall in the coastal city of Varna is seeking planning permission at the moment and building is expected to begin ‘next year’, with ‘lots’ of interest from potential tenants already.

Elsewhere in Varna, a 700-appartment residential project and a large commercial building in the business park have both been granted planning permission. The former is based upon Orchid’s successful 238-appartment complex in Sofia, of which 70% has so far been sold, for €11m. The latter will be a duplicate of Orchid’s Porsche Business Centre in Sofia, completed during the last year and 50% occupied so far.

According to national statistics, the blooming Bulgarian economy expanded at 6.6% in the second quarter – ahead of forecasts – and Orchid is benefiting from this as it operates in the fast-expanding and gentrifying cities of Sofia and Varna. There’s plenty of cash available, after a €25m institutional fundraising at a price of 139p – a good premium to the 95p issue price from July 2005 – and the company continues to milk its two Black Sea hotels for cash, expecting higher occupancy rates next year.

Interim figures to June show pre-tax losses were largely flat at €896,000, with sales up from €344,000 to €3.3m. Total assets rose 68% to €75.9m.

Growth Company Investor recommended the shares at 120p in April and believes the company is continuing to demonstrate that it is worth backing. Add.