Real estate in China has been hit hard. However, that is mainland China. In Hong Kong, real estate is improving even more. Here is a development and management company that has positive earnings and is traded well below average.
Hopewell Holdings Limited is a Hong Kong-based real estate investment and management company. HOWWY is involved in ownership and management of properties, holding of hotels, property development and investments in power plants. The stock is traded at $3.60.
Real estate in China has taken a hit over the past several years. This stock has also seen the same kind of damage selling off over the past several years. Now, however, the company’s stock has stabilized along with the earnings and the real estate market in China.
But, this company primarily focuses its ventures in Hong Kong and has largely been immune to the epic building that has happened in mainland China. Instead, Hong Kong’s real estate market, which has come off of its highs prior to the financial collapse, the market has stabilized and economic activity has been expanding again.
But, investors are loathe to get back into real estate stocks, and perhaps even more so in Asia, especially China. A lot of investors have gotten burned in real estate and are wary of getting back in. This has left REITs and other real estate type investments undervalued.
The earnings from the past several years in HOWWY had declined in 2013, along with economic activity around the world. But, since then, earnings have improved and are continuing to increase.
Here are the earnings over the past several years:
Earnings are to come in relatively the same as 2015. The EPS ratio is roughly 9 at the time of this writing. The industry average, however is nearly three times that level at 25. This makes a company that has positive, and increasing, earnings below market value. And, the Price/Book is also quite low comparatively, 0.50 versus 2.05.
An investor could purchase this stock at $3.60 per share, then, if the earnings returned the same amount, theoretically the investor would earn a more-than 10% return on investment for the year.
But, there are two things that I really wanted to point out.
First, the economy is expanding around the world. The economy in the United States is increasing above baseline, above 2%. Inflation came in for the month of January at 2.50%. All of that money that was printed by central banks to prop up the economies of the world is starting to show up in prices. Interest rates are heading higher because of this. And, in any inflationary scenario hard assets, of which real estate qualifies, is the best investment.
The other thing I wanted to point out is that the world’s stock markets are priced at variables that are high when looked at historically. Eventually, there will not be any buyers to buy at these levels. Instead, investors are going to want to find value. A real estate investment is a wise choice for the above mentioned reasons.
This stock will eventually catch up to the industry average. That would push this company’s stock upward from $3.60 to roughly $9.00 per share. Once investors start looking deeper for these kinds of opportunities this stock will be one of those that are going to head much higher.
HOWWY is a solid investment simply because of the EPS ratio and what you get for investing into the company. The fact that you can buy this stock with these earnings is a major opportunity, one you would not want to pass up at this time. Over the course of the rest of this year there are going to be further asset increases. This company is well positioned to profit from that.
|This headline from Macroaxis disseminated on 02/15/2017 added to the next day price reduction.The trading delta at closing time to closing price of the next trading day was 0.56% . The trading delta at closing time when the story was published to current closing price is 9.72% .|