If bottom picking is your shtick - HYPROP - SA Listed Property

2021年8月1日

Yup, on the 1D HYP chart it's all bad:
- Bear channel (not bull flag!),
- MACD death cross,
- RSI 37 but looks like it has more to give,
- Price < 5EMA < 15EMA < 200DMA.

Yucky.

HOWEVER, if you enjoy rolling the dice on bottom picking, consider the following:

- During the peak of the Covid selloff (no vaccines, armageddon, etc) HYP was trading in a range call it R15 to R25
- Current price is at the top of this range - in other words, the price is now as good as it was when there was no hope.
- Depending on whether you're a glass half full or half empty person, you could view the current charts as a great confirmation for a short. End of days etc. Conversely, you could view it as an accumulation zone between R23.15 and R25.15. Things can't get any worse etc.

Regarding fundamentals, some additional considerations:

- HYP does have some exposure to Africa & the Balkans, but it is primarily an SA large shopping center owner (85%+ of income). Its prospects are thus primarily correlated with economic growth & the efficacy of the vaccine rollout over the next year.
- It has no KZN exposure & some of the best quality assets in WC (Somerset Mall & Canal Walk).
- It has very little office exposure, so work form home is not a valuation driver here.
- LTV's, especially after the Atterbury disposal, are now 35.8%. Low & safe, nothing to see here.
- It has completed its book build (read: your dilution is already factored in) @R28.00. The institutional types who do things like buy book builds were happy to pay 13% more than the current price.
- Its NAV Dec-2020: R74.48. June-2019: R95.78. Therefore it's trading at call it a 66% discount to NAV after Covid write downs were properly factored into NAV, and at call it a 75% discount to pre Covid NAV. That seems like a lot.
- Before the world ended it was paying divs in the R6.60 p.a. area. Even if only half of that is restored (R3.30), you're still looking at a 13-15% div.

To be clear, the price can still get worse, this thing is clearly rolling down the hill. However, if you have a medium term view and the stomach & balance sheet to ride out some volatility & drawdowns over the next 6 months, accumulating a position at R23-R25 or cheaper may pay off very handsomely over a 12 month period.

Safe trading
UC

ps. a nice summary of the risks involved: moneyweb.co.za/news/companies-and-deals/theres-further-downside-risk-to-listed-property-values-momentum/