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John Polomny is an individual investor and speculator seeking unique, overlooked, and well researched opportunities and speculations from all over the world.
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  • Mongolia Growth Group July Shareholder Letter 0 comments
    Aug 13, 2012 10:11 PM | about stocks: MNGGF

    Good news at MGG, rents continue to increase at well over double digits.

    Over the past few months, I've received many questions about annual increases in market rates for commercial space in downtown Ulaanbaatar. On a very generalized basis, it seems that per meter rents on the best streets in downtown are up by at least 50% over the past year, while secondary streets have seen somewhat smaller increases. This seems to be driven by a desire by multi-branch Mongolian businesses to have an increased retail presence on the highest traffic streets. In particular, we have seen material increases in market presence from banks, multi-chain restaurants and cell phone companies. Recently, we have seen inquiries from international brands that now have Mongolia on their radar. Over time, it is only natural that these international brands will also need retail space. This demand, combined with rapidly increasing levels of disposable income from Mongolian consumers, is leading to an increased ability for tenants to pay higher rates and these tenants are bidding up prices along the high traffic streets in the city.

    I would have said a year ago that the share price was overvalued. However with rents increasing like they are it is difficult to put a current valuation on the company. I am going with the comparisons with Kazahkstan and Qatar, other resource rich countries that saw their real estate prices soar. Hopefully I can do a valuation analysis when their second quarter numbers come out.

    Disclosure: I am long OTCPK:MNGGF.

    Themes: mongolia Stocks: MNGGF
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