Investment idea: Resilient REIT Limited and Hyprop Investments Limited
2In this report, we look at Resilient REIT Limited (RES) and Hyprop Investments Limited (HYP).
We issue a buy recommendation on both RES and HYP.
We base our recommendations on improving rental reversions and vacancies across the retail sector and in both individual companies.
In combination with the property sector’s relationship with bond yields, placing it to potentially benefit from an easing of interest rates, we see both companies as undervalued with risk skewed to the upside.
However, we prefer RES to HYP due to the following:
- RES has greater exposure to South Africa compared to HYP in revenue, number of properties and provinces.
- RES has more debt due in CY24 compared to HYP and is also less hedged, positioning them to benefit more from a potentially lower interest rate environment.
- RES is better positioned as a leading property company in load shedding protection amidst the current uncertainties related to backup power generation in the current operating environment.
- RES has a dividend yield of 8.7% trailing.