Chief Investment Officer, KIS Capital Partners

Josh Best

Chief Investment Officer

Boutique absolute return fund manager

KIS Capital Partners

KIS Capital Partners is a boutique absolute return fund manager based in Sydney, Australia with an Asia ex Japan trading focus. We believe that an absolute return fund should be risk and performance focused with strong attention to investment differentiation. Absolute return funds should not be asset gatherers. We invest alongside our clients in liquid and transparent markets with a focus on pragmatic and vigilant risk management.

Equity Bottom-Up

When analysing good companies it is often easy to forget the importance of price and its relation to investment risk. Seldom do even the strongest companies prove to be good investments if too high a price is paid.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/025/289/original/MTR-logo.png?1493685853" class="editor-image img-responsive" data-smartkarma-image-id="25289"></figure><a href="https://www.smartkarma.com/entities/13289" target="_blank" data-smartkarma-citation="entities:13289:1">MTR Corp (66 HK)</a> is a world-leading railway operator with an expansive network of 87 stations covering 220km of Hong Kong countryside. MTR boasts a staggering 48.4% share of the Hong Kong franchised public transport market. The company’s combined railway and station operations account for c.65% of its recurring earnings. These operations are separated into two revenue streams; fare revenue and station commercial business revenue. The remaining c.35% of recurrent earnings comes from MTR’s Hong Kong rental property division, consisting of a portfolio of shopping malls and offices. MTR also operates a property development business that contributes a substantial, yet non-recurring, amount to earnings. Finally, MTR operates railways in mainland China, Australia, and Sweden that contribute c.5% of earnings – an inconsequential segment in the scheme of things.<blockquote>With the company sitting on c.24x underlying FY17e earnings, investors must ask themselves; does MTR deserve a growth multiple?</blockquote>

When analysing good companies it is often easy to forget the importance of price and its relation to investment risk. Seldom do even the strongest companies prove to be good investments if too high a price is paid.MTR Corp (66 HK) is a world-leading railway operator with an expansive network of 87 stations covering 220km of Hong Kong countryside. MTR boasts a staggering 48.4% share of the Hong Kong franchised public transport market. The company’s combined railway and station operations account for c.65% of its recurring earnings. These operations are separated into two revenue streams; fare revenue and station commercial business revenue. The remaining c.35% of recurrent earnings comes from MTR’s Hong Kong rental property division, consisting of a portfolio of shopping malls and offices. MTR also operates a property development business that contributes a substantial, yet non-recurring, amount to earnings. Finally, MTR operates railways in mainland China, Australia, and Sweden that contribute c.5% of earnings – an inconsequential segment in the scheme of things.With the company sitting on c.24x underlying FY17e earnings, investors must ask themselves; does MTR deserve a growth multiple?

MTR Corp: Paying a High Price for a Cheery Consensus