market folly

Next up in our notes from Invest For Kids Chicago 2013 is Peter Zaldivar of Kabouter Management.  He was part of the emerging manager panel and presented a long of Hotel Shilla (008770).


Peter Zaldivar's Presentation at Invest For Kids Chicago 

•    International focus; looks for smaller underloved companies
•    Hotel Shilla (008770) 
•    $2.4 billion market cap
•    2 hotels in Korea (10% of sales) and duty free shops (90% of sales)
•    6 locations generate $6 billion of sales
•    Duopoly – 35% versus 50% Lotte (private)
•    Fast growth of 15% and accelerating
•    Barriers to entry are scale and government licenses
•    Chinese are getting richer – number of rich Chinese are growing substantially
•    Korea wants tourism and China is only 90 min away
•    Cosmetic surgery – world center for plastic surgery
•    Most important thing is that they sell luxury brands for less (as in 40% less than in mainland China)
•    South Korea has a tourist police force that verify authenticity
•    Chinese half of customer base and growing at 30% per year
•    More Chinese are getting passports – still less than 10%
•    Yet Hotel Shilla is trading at 17.2x 2014E earnings
•    28% upside in a base case
•    69% upside implied by a slight premium to comps
•    Same P/E as European counterparts would imply a 60% gain


Check out the rest of the hedge fund presentations from Invest For Kids Chicago here.