Hyprop (HYP) is a leading real estate investment trust (REIT) specializing in high-quality shopping malls in South Africa, with some interests in Eastern Europe and Africa to the North. Among its assets are well-known shopping malls like Rosebank, Canal Walk, Hyde Park, and Clearwater. The company has felt the impact of decreased consumer spending, leading to lower trading densities. Currently trading at close to half of its net asset value (NAV) of R63.39, we view this as an attractive investment opportunity.
Under the leadership of the new CEO, Morne Wilken, Hyprop is focusing on innovative strategies to attract customers back to its shopping malls, including the development of rooftop gardens and shared workspaces.
In its results for the six months ending on 31st December 2023, the company reported a loan-to-value (LTV) ratio of 37.4% and headline earnings per share (HEPS) of 111.3c, compared to 226.1c in the previous period. The company noted positive trends in its South African portfolio, with increases in tenant turnover, trading density, and foot traffic. Retail vacancies for the South African portfolio remained well-controlled at 1.3%.
From a technical standpoint, the share price found support at 2562c in November 2023 and has been on an upward trajectory since then, despite the setback in the recent results. We perceive this as a buying opportunity, considering the company's strong fundamentals and potential for growth.