THG look like they may have broken out of a triangle formation on the charts & want to good higher. Their fundamentals also represent good value as outlined below. Could easily see them move higher today. Positives: 1. After writedowns NTA could still be in the region of 80 cents 2. Gearing at Dec 2008 was 49% & with forshadowed writedowns (refer ASX announcements)their gearing should stay just under 60% 3. They hold an excellent portfolio of property in excellent locations 4. Prior to GFC they were running a share buyback program (refer ASX announcements) 5. May have to part one, maybe 2 properties to bring the gearing level lower but what remains are very good assets. 6 Chart looks like it may have bottomed around 29/7/2009 with the secruties at 20 cents 7. Interest cover 1.88 at Dec 2008, so they still look like being capable of paying their lenders. 8. Most of the REITs have bounced but THG seems to have been ignored by the market, yet still presents good fundamental value compared to many other REITS. Negatives: 1. Weaker trading conditions in the hotel division (down 9%), but partly offset by commercial & retail being up 5%, development side will be significantly down (refer ASX Announcement 19/6/2009) 2. Expect substantially loss reported, but THG is largely dependant on the Australian economy for revenue, so things may not get a lot worse. THG may not be any rocket machine in the short term but over the longer term it could prove to be very cheap given it still sells for around 30 cents with 80 cents of NTA. Please do your own research on THG, as no investment advice is given Regards Buffett
