What Makes Reysas a Hidden Gem for Investors?

TL;DR

Reyasas, Turkey's leading warehouse operator, is undervalued with a market cap of just $20 million despite having assets worth around $800 million. The company benefits from a strong capital allocation strategy, high-quality tenants like IKEA and Amazon, and diversification into rail and solar businesses, offering significant upside potential for investors.

Transcript

like i've i've mentioned before like you know i was in turkey in uh in 2019 and you know i'm visiting all these turkish companies and one of the companies i visited uh had it's the number one warehouse warehouse operator in turkey they've got about 13 million square feet of warehouse 99 leased uh the tenants are like ikea amazon car four very blue ... Read More

Key Insights

• 👲 The Turkish warehouse operator offers exceptional value for investors, with assets worth significantly more than its market cap.
• 🥺 The company's management team is highly skilled in capital allocation, leading to high returns on equity.
• 🤩 The business has diversified into other areas such as the truck fleet and train freight operations, further increasing its growth potential.
• 👨‍💼 The company's entry into the solar business has been highly successful, with a rapid return on investment.
• 🏃 The father and son duo running the business have a complementary skill set and have proven to be astute allocators of capital.
• 🖤 The company's lack of communication with the market and absence of an investor relations department may have contributed to its undervaluation.
• 💗 Over a 10-year period, the market cap of the company remained stagnant, while its value continued to grow.

Questions & Answers

Q: Why is the Turkish warehouse operator undervalued in the market?

The company's market cap is significantly lower than the value of its assets, making it an attractive investment opportunity.

Q: How did the investor become involved with the Turkish warehouse operator?

The investor was introduced to the company by a Turkish friend and was impressed by the quality of the warehouses and the management team.

Q: Why didn't the investor try to privatize the business?

The investor is not an activist investor and did not want to interfere with the business decisions of the father and son who run the company.

Q: How does the company generate free cash flow?

The company has steady-state free cash flow of around $30-40 million, with some fluctuations due to interest rates and currency exchange rates in Turkey.

Summary & Key Takeaways

• The number one warehouse operator in Turkey with 13 million square feet of warehouse space and prestigious tenants is undervalued in the market.

• The company has a strong track record of capital allocation and focuses on investments with a high return on equity.

• The business also owns the largest truck fleet in Turkey and has a growing presence in the train freight industry.