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property price in HK is set to post its biggest decline since 1998 (analysts are predicting AT LEAST a 30% decline by 2015), this will definitely hurt AUM and eventually ARA's bottom line unless they can offset this by increasing the management fee, but can they do so, what has the trend been like in the past?
another issue is the industry has almost no barrier of entry, competition is stiff... with the sentiment in Southeast Asia weak at the moment, will they still be able to raise enough funds for its private funds?
the tremendous growth in AUM in recent years is primarily driven by the skyrocketing property price in HK (especially its Fortune REIT -> just take a look at how much they bought the properties VS the current valuation, that's a remarkable gain).... so if property price corrects, which it will, AUM won't grow as fast as in the past, so we shouldn't value this company using historical PE as guidance (perhaps should use lower PE?)... I tend to think the growth has hit its ceiling... very doubtful the company can double the AUM by 2016 (they said so during the 10th anniversary dinner where the atmosphere was exciting, IMO)
another issue is the industry has almost no barrier of entry, competition is stiff... with the sentiment in Southeast Asia weak at the moment, will they still be able to raise enough funds for its private funds?
the tremendous growth in AUM in recent years is primarily driven by the skyrocketing property price in HK (especially its Fortune REIT -> just take a look at how much they bought the properties VS the current valuation, that's a remarkable gain).... so if property price corrects, which it will, AUM won't grow as fast as in the past, so we shouldn't value this company using historical PE as guidance (perhaps should use lower PE?)... I tend to think the growth has hit its ceiling... very doubtful the company can double the AUM by 2016 (they said so during the 10th anniversary dinner where the atmosphere was exciting, IMO)