Irene Lee is an ex-banker, probably gets new calls weekly about potential deals. Not great. By the way, another reason why Hainan is winning is that the cap for duty free is CNY 100,000 vs CNY 12,000 in Hong Kong.
Thanks for the article. I learnt a lot and you obviously know it very well.
One sanity check I like to use with stocks that are out of favour is to simply look at the chart. If it's clear the market valued a stock much higher in better times than it backs up that it may be cheap and there may just be a certain amount of patience involved. Obviously this also applies to almost all HK developers and there have been company missteps in Hysan's case too.
Details about different areas all align with my annual HK family visits. Appreciate your writeup a lot!
Given that you didn't end with a recommendation, I am curious why did you pick $14.hk to discuss in detail? Surely there must be another HK real estate company that doesn't steal from shareholder, makes good capital allocation, and has good business strategies?
Praya don’t you believe that Hysan is way too concentrated in just HK surely some mainland exposure wouldn’t have hurt them at all especially when considering some of the stupid mistakes made in HK by the management. If you’re interested in Mainland Developers maybe check out Joy City.
I mean if management is going to make stupid mistakes they can make them anywhere. In general I don't think mainland exposure would be bad - HK developers like HKL/Swire/SHK/Hysan have a natural advantage that they've got great long term relationships with top international brands who can trust they won't blow up like a Wanda or even Vanke who were the best run mainland firm.
Just a question of if management is already mistake-prone in their home market, will they make more mistakes when expanding in a new market?
My wife and I enjoy spending time at Lee Gardens and Hysan Place in CWB. There are so many luxury brand tenants. It's comparable to The Landmark in Central.
I definitely did not know this huge development was originally meant to be for an opium factory.
As you mentioned, buying so much real estate in 2021 at the top of market was definitely a mistake in retrospect. Residential property values (Centa-City Index) are down 25-30%. Commercial property values are down more in some cases. No wonder Hysan stock is down ~60% since 2021.
At this point, it's hard to say when the property market will rebound. So much depends on the Chinese economic recovery, and as you pointed out, much of the Chinese luxury spending in HK before covid now stays on the mainland.
Irene Lee is an ex-banker, probably gets new calls weekly about potential deals. Not great. By the way, another reason why Hainan is winning is that the cap for duty free is CNY 100,000 vs CNY 12,000 in Hong Kong.
Thanks for this write up. How cheap and how expensive could maybe be defined in more detail
Thanks for the article. I learnt a lot and you obviously know it very well.
One sanity check I like to use with stocks that are out of favour is to simply look at the chart. If it's clear the market valued a stock much higher in better times than it backs up that it may be cheap and there may just be a certain amount of patience involved. Obviously this also applies to almost all HK developers and there have been company missteps in Hysan's case too.
Details about different areas all align with my annual HK family visits. Appreciate your writeup a lot!
Given that you didn't end with a recommendation, I am curious why did you pick $14.hk to discuss in detail? Surely there must be another HK real estate company that doesn't steal from shareholder, makes good capital allocation, and has good business strategies?
Praya don’t you believe that Hysan is way too concentrated in just HK surely some mainland exposure wouldn’t have hurt them at all especially when considering some of the stupid mistakes made in HK by the management. If you’re interested in Mainland Developers maybe check out Joy City.
I mean if management is going to make stupid mistakes they can make them anywhere. In general I don't think mainland exposure would be bad - HK developers like HKL/Swire/SHK/Hysan have a natural advantage that they've got great long term relationships with top international brands who can trust they won't blow up like a Wanda or even Vanke who were the best run mainland firm.
Just a question of if management is already mistake-prone in their home market, will they make more mistakes when expanding in a new market?
My wife and I enjoy spending time at Lee Gardens and Hysan Place in CWB. There are so many luxury brand tenants. It's comparable to The Landmark in Central.
I definitely did not know this huge development was originally meant to be for an opium factory.
As you mentioned, buying so much real estate in 2021 at the top of market was definitely a mistake in retrospect. Residential property values (Centa-City Index) are down 25-30%. Commercial property values are down more in some cases. No wonder Hysan stock is down ~60% since 2021.
At this point, it's hard to say when the property market will rebound. So much depends on the Chinese economic recovery, and as you pointed out, much of the Chinese luxury spending in HK before covid now stays on the mainland.
great note