by winston » Wed Jun 24, 2020 8:43 pm
not vested
Hysan Development Co Ltd (OTC:HYSNF)(OTCPK:HYSNY)
Investment thesis: Hong Kong is one of the most densely populated areas in the world, and due to its natural boundaries, things are not going to change anytime soon.
While this does not exactly bode well for tenants, it creates an excellent environment for landlords.
Among the countless great companies dealing in RE listed in Hong Kong, I decided on starting an investment in Hysan Development, a developer owning some key trophy assets in Causeway Bay.
Hysan has more than 4 million square feet of high-quality office, retail and residential properties, with a preponderance for office and retail, which make up for approximately 90% of the company’s NOI.
The protests and the pandemic have struck this company hard, with shares trading close to where they were a decade ago.
I find the valuation absurd, especially when considering Hysan’s free cash flow per share went from about 1 HKD in 2010 to 2.6 HKD in 2019.
The company’s dividend, which Hysan has grown for almost 20 years, now yields nearly 6%, and the company’s operations fully cover it.
The company also employs a low degree of leverage, and its balance sheet is rated A- by Moody’s and Fitch.
The founding Lee family maintains a controlling interest of about 40% in the firm, which I see as a positive, with interests aligned with minority shareholders.
Source: Seeking Alpha
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