No, and I don't necessarily disagree with some of your criticism of KPG. Long term, historically, KPG have been quite cyclical. They've done pretty well in the good times and then been knocked right back in the bad times. Their sp grew quite well from 2000 up until the GFC and was then knocked back to where it was 10 years prior. After the GFC, the sp was growing reasonably well right up to covid when it was knocked right back below where it had been 20 years ago. Arguably, its sp is recovering post covid albeit with a tepid bounce to this point. So, its a property company that weirdly behaves like a cyclical company. Not then a good investment if we are about to go into a recession. But are we? Are we not about to burst out of covid into the sunlit uplands of retail therapy, international travel and business expansion? Shouldn't we expect KPG to do quite well in that environment as it has in the past?
If you compare KPG sp with say GMT, their performance is pretty much identical historically right up until covid. KPG's recovery from covid is delayed/muted compared to GMT, presumably because of the greater effect of covid on retail. Are you better to buy the company whose sp has recovered or the company whose sp is about to recover?
I've always found the chart chart below useful - Listed Property stocks as per NPF and 10 Year Govt stock relationship (62% correlation is pretty strong)
Currently it's showing listed property stocks (collectively) are about 25% to 30% over valued
So 25% off KPG share price is $0.85 ........but heck they are so out of kilter valuation wise v peers lets be generous and say the impact of a rerating of property stocks might hurt them so much and say only 12% down ...... hey presto KPG $1.00
What a load of crap eh ..... this time things are different ......but I have faith and confidence in my analysis
Last edited by winner69; 16-11-2021 at 08:43 AM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Gosh you make it sound like spring has broken out in rural canterbury, the lambs are bleating to their mothers, the lush green grass is everywhere, a land of milk and honey where dairy has broken through $9 kilo and rural utopia has arrived. Sounds absolutely wonderful...I'd get on the next plane down there if I could and probably buy a house there too.
Alas my friend I can reliably tell you that the mood in the wider Auckland region where its ~ 2 million inhabitants have been treated like caged animals for so long they can't remember is very very different. Somber doesn't even begin to describe it.
What you have nicely embraced with your comparison between GMT and KPG is the transition toward online retail. GMT serve online retail and can barely get enough warehouses built. KPG malls are not going to go back to 2019 level's of activity anytime soon. The bounce-back we experienced this time last year isn't going to happen in physical stores.
Last year we bounced back into a covid free environment, that was utopia. This time we're opening up into an epidemic environment are people are going to be FAR more careful about where they go. That's how I see it anyway...but I do understand from your point of view in your part of the world things must look very different.
You have to have lived this soul destroying endless groundhog day existence to know what its effect has been on people. Its literally impossible for me to explain it to you. Are we headed for a recession ? Yes I think we are.
P.S. Just saw Winner's chart above, its looks ominous. At the risk of being excessively dogmatic its impossible for me to overstate how serious it is that KPG's directors and management are really making no attempt to keep their dividends at pace with inflation. In fact quite the opposite, they keep going down over the years. Listening into the last call, its clear they have no plan whatsoever to fix this other than a simple build it and they will come. Food for thought. How's that been working out for them in the last decade ?
PPS Yes watching OCA's share price over the last few months has also been a sobering experience.
Last edited by Beagle; 16-11-2021 at 08:51 AM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
......What you have nicely embraced with your comparison between GMT and KPG is the transition toward online retail. GMT serve online retail and can barely get enough warehouses built. KPG malls are not going to go back to 2019 level's of activity anytime soon. .........
Betting against major trends is never going to work out well, that's for sure. I'm not gregarious and have never liked malls but isn't that something people want, a shopping destination? Not all the evidence suggests mall retail is doomed:
Betting against major trends is never going to work out well, that's for sure. I'm not gregarious and have never liked malls but isn't that something people want, a shopping destination? Not all the evidence suggests mall retail is doomed:
Nothing attracts people like other people. Add in the 'need' to get out of the house occasionally. Online shopping will kill conventional retail just like television was going to spell the end of movie theatres.
Chances are share price will break out of that tight trading range shown above tomorrow …. to the downside
Earnings result next week - I would say that would be the big move catalyst. Property revaluation and dividend confirmation inbound - could that lead to a break lower rather than than higher? Never say never I suppose. Bear in mind the stock price is already sitting well below the current $1.36 NTA per share value, and that NTA is likely heading higher next week.
Last edited by LaserEyeKiwi; 17-11-2021 at 06:33 PM.
Lynn Mall was quiet this morning (admittedly before 10am) and I asked the staff member at Farmers how business had been since reopening. She said it had been quite steady. By 11am the place was looking a lot busier with the carpark reasonably full. Mitre 10 just around the corner didn't have a spare space in the carpark.
Originally Posted by Beagle
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