Astoria Investments – Initiation of Coverage – Unique & Growing Businesses, Discounted

Share Code: ARA – Market Cap: R492m – Discount to NAV: 36%

Astoria: Structure, Aim & Portfolio

  • A tax-advantaged, Mauritian “HoldCo” that is listed on both the JSE and the SEM, Astoria Investments’ aim is to grow its hard currency (i.e. USD) NAV per share at a high real rate over time.
  • Having permanent capital & an aligned investment manager (see below), Astoria has invested in a range of unique, unlisted, growing businesses with strong, aligned management teams.
  • The largest of these is Outdoor Investment Holdings (a well-run retailer, wholesaler & manufacturer focussing on the outdoor, hunting and safari markets) with other notable investments in diamond mining (land & marine), tertiary educational (health & skincare), vehicle finance & IP-led protective biking equipment.
  • The Group does invest in the listed space when value is present, for example, their investment into RAC Preference shares as a discounted entry-point into Goldrush (amongst the largest domestic alternative gaming business in South Africa).
  • These investments are relatively conservatively valued in NAV (see our analysis and arguments for this in our full report).

Investment Manager & Alignment: RECM Global

  • RECM Global, offers an efficient investment manager that aligns interest with other shareholders through its association with key directors that also personally hold c.22% of Astoria’s ordinary shares.

Valuation, 12m TP & Implied Return: Discounted & Growing

  • Updating Astoria’s NAV to current prices, the share price is trading at a relatively large c.36% discount to it.
  • If we take out our calculated “HoldCo discount” of c.14.6% from this NAV, we arrive at a fair value for Astoria’s shares of c.1170cps or c.25% higher than the current share price.
  • Rolling this fair value forward at our Cost of Equity (18.1%), we arrive at a 12m TP of c.1381cps that implies a significant potential return of c.57% from the current share price.
  • Astoria is invested in unique & growing businesses that it values conservatively, which implies a material component driving future returns is likely to be the collective earnings growth of these businesses combined with their high discount rates unwinding.