Peter Zaldivar's Hotel Shilla Pitch at Invest For Kids Chicago ~ market folly

Wednesday, October 30, 2013

Peter Zaldivar's Hotel Shilla Pitch at Invest For Kids Chicago

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.

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