December 27th, 2021 | 10:45 CET
Mutares, Hong Lai Huat, Aurelius - Yield generators in 2022!
Table of contents:
Mutares - All signs point to growth!
The private equity investor acquires small to medium-sized companies and parts of groups in situations of transition, based in Europe, which have clear operational improvement potential. Mutares actively supports and develops the portfolio companies with its investment and expert teams as well as through strategic add-on acquisitions. After stabilization and repositioning, the companies are sold with a target return of 7 to 10 times the invested capital.
In 2021, the Munich-based Company acquired 13 companies. Most recently, the footprint in Scandinavia was significantly increased in Goods & Services. In the current fiscal year, sales are expected to increase to at least EUR 2.4 billion. The Company reported in its Q3 figures that the transaction pipeline is very well filled with a sales volume of EUR 9 billion. As guidance for 2023, Mutares has set its sights on consolidated revenues of at least EUR 5 billion. With the portfolio growth, consulting revenues are also increasing, which together with portfolio dividends and exit proceeds are accruing to the Company.
Shareholders will participate in the Company's success based on a transparent and attractive dividend policy. The medium- to long-term plan is to pay out 1.8% to 2.2% of Group sales. The sustainable dividend policy is to consist of a basic dividend and an exit-dependent performance dividend. If the medium-term targets are only half achieved, investors will be buying a stock today that should generate an annual dividend yield of well over 10% in a few years. Analysts believe the shares have an upside potential of more than 40%.
Hong Lai Huat - Still undiscovered small-cap
Hong Lai Huat Group Limited has been operating as a real estate developer and property developer in Singapore, which is also the Company's headquarters, since 1998. The island nation is one of Asia's most important financial centers and a central shipping hub. Singapore has first-class marks in quality of life, security and economic performance. The home ownership rate is a good 90%.
In recent decades, the Group has completed numerous projects in the city-state, ranging from public and private residential developments to commercial and industrial buildings. Implemented projects in Singapore include D'Ecosia, D'Fresco, D'Castilia, D'Almira, D'Lithium, D'Kranji Farm Resort and D'Centennial.
In 2008, the Group diversified into the agricultural sector in Cambodia and has since completed the development of approximately 10,000 hectares of farmland growing fresh cassava. The Group has also expanded its real estate development in Cambodia with the successful launch of its first mixed-use condominium project, D'Seaview. D'Seaview comprises 737 residential units and 67 commercial units. Recently, the Singaporeans announced the complete project sale. With a market value of SGD 50 million, investors should put the still unknown stock on their watchlist.
Aurelius - 30% discount to NAV
Like Mutares, Aurelius can also look back on a record year, as is evidenced by the Q3 figures. In the first nine months of the current financial year, the operating result (EBITDA) increased by 81% to EUR 181.4 million and is thus above the 2020 total profit. The basis for the increase was the dynamic development of the portfolio companies. The intrinsic value per share (net asset value) increased by 20% compared to the end of 2020 to EUR 40.43. The shares are thus trading at a discount of around 30% compared to this key figure. Aurelius took advantage of the valuation level and announced the acquisition of 1 million own shares.
Investment companies and real estate companies offer interesting investment opportunities. Mutares and Aurelius should continue to generate respectable returns for shareholders in the future. Hong Lai Huat, which is still widely unknown, belongs on the watch list for next year.
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