Our opinion on the current state of HYPROP(HYP)

6 天前

Hyprop (HYP) is a leading property real estate investment trust (REIT) that specialises in high-quality shopping malls in South Africa and some interests in Eastern Europe and Africa to the North. It owns some of South Africa's best-known shopping malls like Rosebank, Canal Walk, Hyde Park, and Clearwater. It has been impacted to some extent by the fall-off in consumer spending through lower trading densities.

This share is currently trading at close to half of its net asset value (NAV) of R63.39 - which in our view makes it a good buy. The new CEO, Morne Wilken, is intent on building roof-top gardens and offering shared workspaces to lure customers back to its shopping malls.

In its results for the year to 30th June 2024 the company reported net operating income up 6,1% and distributable income per share down 8,6%. The company's net asset value (NAS) fell 4,8% to 6032c per share and its loan-to-value (LTV) was stable at 36,4%. The company reported, "Strong liquidity position with R803 million of cash and R2 billion of available bank facilities - Euro30 million (R600 million) reduction in euro borrowings in line with debt amortisation/ reduction strategy - R500 million new capital raised through the FY2023 DRIP."

In a pre-close operating update for the four months to 31st October 2024 the company reported, "Key trading metrics continued to improve, other than foot count which was in line with the comparative period, showing the results of our continuing efforts to enhance the relevance and competitiveness of our nine centres (four in the Western Cape and five in Gauteng). Both tenants' turnover and trading density continue to grow because of our ongoing repositioning initiatives and leasing strategies aimed at optimising our tenant mix, coupled with improved consumer sentiment."

Technically, the share found support at 2562c in November 2023 and has been rising ever since although the recent results were a set-back as well as its exposure to Pick 'n Pay stores. Pick 'n Pay stores are anchor tenants in all Hyprop shopping malls - so the likelihood that Pick 'n Pay may close as many as 40 of its underperforming stores is a major concern. Despite this, Hyprop is trading at well below its NAV and on a P:E of 14,56.

We still see it as a potential buying opportunity. We added it to the Winning Shares List (WSL) on 15th August 2024 at 3439c per share. It has since moved up to 4360c - a gain of 26% in just over 3 months. On 23rd September 2024 the company announced the sale of its interests in Nigeria and Ghana for a combined value of just over R1billion. The cash will strengthen its balance sheet.