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Now POSITIVE news… As has been noted on here before, Hirandandani really is the best in class developer of townships. They can command a significant premium to market end sales pricing due to the quality of their offer and their after sales service. Baring a company fraud – it is impossible to conceive that money will be lost long term from this share price level. India residential is at or near its peak again from 2007. Yes commercial remains tough and 30% down on its peak in value terms. Remember India’s nominal GDP growth rate (adding inflation on top of usual GDP figures) is circa 15%pa. This will mean that if all other things being equal property prices should go up dramatically. The current price infers the projects will collapse with around 10% of NAV returned? That’s daft. The NAV may be a little high as I think it overvalues the commercial elements of the space, but not significantly. With this in mind the stock at this price feels like a no brainer. Assuming the Indian economics continue along a similar path, I would not be surprised to see this share price move fairly sharply upwards soon, having done some very rough development type appraisals I would not be at all surprised to see 2000p per share be distributed over the life of the projects. Which however could easily take 10 years from now. If Panvel goes well this could get to 3000p. But I wouldn’t want toooo far get ahead .. first let’s PLEASE see a change in SP direction. The only other really sinister thing would be if one of the major shareholders (or a new shareholder) wanted to change HH development agreement and increase their holding substantially. And so vote in a take private at a derisory share price to take the upside for themselves. I can’t see the current institutions letting this go for even as low as £2 though. Why would they?
sorry my last sentence was cut off. Give me 20 mins and i'll post the next part of what i want to say.. it will be more positive!
Hello guys, i am a new poster on here. I have tho been reading avidly for a long time. i should have got involved sooner i guess. I was involved helping to run a property fund investing in India during 2007 and 2008, i have also been involved in structuring 3rd party participation in UK deals for a lot longer. I have been to both the Hirco sites, both are in excellent locations. When the new trans harbour bridge in Mumbai becomes a certainty (very soon I hope) the Panvel location will be in an amazing spot. Like most of you i have been following Hirco for ages, generally unable to comprehend how the valuation can be so low. I don’t think that poor SP performance has much to do with running out of money. Hirco itself doesn’t really need any money other than to pay its basic running costs. The downstream project companies should be able to take care of themselves via debt (yes folks there is more debt than we think in this baby!) and also being highly cash generative as a significant proportion of sales revenue can be receieved pre and during construction. If Hirco does need money in the next year or so, compared to the asset value of what is being created it will be negligible - so should be no problem in raising it separately. I’ll dwell on a few of the negative points first.. My main reason for share price non performance is the perception that Hirandandani is effectively in total control of Hirco. Ie they have the majority of voting rights in the downstream companies and we can't remove them as manager for non-performance. I have looked at the docs on the website and they do not appear to be worded well to terminate Hirandandani’s development management contract if that is what the shareholders wanted to do. I would be very grateful for a second opinion. Another issue is management manipulation of the share price to "manufacture" a soft "take private" or similar deal. This feels like a short term problem for those not wanting to invest more, and an opportunity for those averaging down. Another concern for me is how long it has taken to get Panvel moving. I agree it was a good thing to wait for the crisis to subside, but is there a chance something could be announced negatively re the planning permissions when the results do come out? I have asked one of the non execs if there is a problem and he has said “not to his knowledge” – I think that sums up one of the main issues here.. information flow from India to shareholders is very poor. You only have to look at the annual report to see that. It’s significantly full of irrelevant facts. It is a very long time ago that we were first told that Panvel buildings were about the start being built and I don’t think we know yet if they have been. I hope I am wrong? Lots of “tree nurseries”, show flats, infrastructure… but are there any actual buildings? Continues (more po