🌽 GAZAR SHIM IPO | INVESTMENT OPPORTUNITY: REAL ESTATE | FOREIGN TRADE

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Apparently, Mother Nature didn't get the memo that winter was over. 🤷 

🤔 DID YOU KNOW?

🏛️ INVESTING IN MONGOLIA: REAL ESTATE

Mongolia's construction and real estate industries have displayed remarkable growth over the past seven years, achieving a compounded annual growth rate (CAGR) of 10.8% and 5.6% respectively. It's worth noting that the global average CAGR for the real estate sector is only 5.2%. Despite the international outlook forecasting a CAGR of 4.8% for the real estate industry between 2022-2030, Mongolia's growth rate is predicted to remain constant, providing a stable and dependable market for real estate investors.

In 2022

Last year, real estate brokerage companies in Mongolia sold properties worth ₮1.7 trillion ($542 million), which is double the amount sold in the previous year. The growth in sales can be attributed to the introduction of the Over the Counter market in 2021, which allowed real estate project developers to raise investment by issuing debt instruments.

• Seven issuers raised ₮50.8 billion ($16.2 million) through ordinary debt instruments with a weighted average coupon rate of 17.56% per annum and an average term of 17 months. An additional ₮7.6 billion ($2.4 million) was raised through a REIT bond with convertible conditions.

What are the options?

Investment opportunities in Mongolia's real estate sector currently include:

• Buy-To-Let

• Project development bonds

• Crowdfunding

• Private investment funds

• Real estate tokenization

• REIT-like schemes with convertible conditions.

The recent revision of the Corporate Income Tax law will exempt investment fund activities from taxation, commencing on January 1, 2023. This is anticipated to potentially increase their level of activity and consequently result in higher returns on real estate investments.

In conclusion

Mongolia's real estate market offers investors a stable and attractive opportunity due to its consistent growth rate, successful property sales, and diverse investment options.

For more information download the ULAANBAATAR REAL ESTATE MARKET ANNUAL REPORT by INVESCORE PROPERTY

📈 DATA STORY

Mongolia's total foreign trade turnover in the first two months of 2023 reached $3.4 billion, where exports increased by $1.1 billion (90%), and imports increased by $160 million (15%) compared to the same period of the previous year.

Mongolia has exported goods to 43 countries in the given period, with China, Switzerland, and Japan accounting for 97.8% of total exports. The significant YoY growth of 90% in total exports was mainly driven by the increased export of coal and zinc ore.

The foreign trade balance was in surplus of $1 billion in February 2023, a notable increase of $903 million compared to the same period last year.

🌽 GAZAR SHIM GOES PUBLIC THROUGH ₮10.5 BILLION IPO 

The maker of popular preserved vegetables has raised ₮10.5 billion ($3 million) in its debut on the stock market, fulfilling its original target.

More on the IPO

• 16.5% of its equity was offered to public, for ₮53 ($0.015) apiece. The listing values the company at ₮63.6 billion ($18 million).

• Financing: Gazar Shim plans to finance its product development, automation, and storage expansion efforts and increase its cash flow through the public offering.

• Subscription: The IPO subscription ended on March 31st with a full subscription rate.

Seizing the Opportunity

Gazar Shim has been a leader in the local preserved vegetables market since its inception in 1999. It has a quarter of the market share and aims to eat into the 56% share of imports.

• Profit falls: Despite a 29.8% rise in revenue over five years and 3.8% since last year, to ₮30.2 billion ($8.5 million), higher transport costs have slashed its net profit by 25%, to ₮4.2 billion ($1.2 million) — a first since 2018.

• Valuation: Its price-to-book ratio matches the 2.7 average of other food firms in Mongolia's Top 20 index.

• More than preserved vegetables: Its products also include fruit compotes, mashes, artichoke drinks and honey.

The Mongolian Stock Exchange has been demonstrating steady progress in both diversification and expansion, as growing numbers of companies and individuals show a burgeoning interest in the financial market. Such developments are indicative of a maturing market economy. Gazar Shim's IPO, in particular, serves as a testament to this trend, given that the company is a more conventional business with a strong emphasis on the domestic market. Mongolia’s financial market is picking up steam.

🏃 QUICK STORIES

📌 Mixed Voting System Backed by Mongolia’s Ruling Party. The Mongolian People’s Party, which won a supermajority in the past two elections, wants a mixed system of proportional and plurality representation for the 2024 election. The country tried the system in 2012, before switching back to the current plurality-at-large system. The party hopes the reform will boost confidence in democracy, tarnished by corruption scandals over coal smuggling and bank bribery.

📌 Mandal Life Hires Ivan Chak as New CEO to Take on National Life Insurance. Mandal Life, a new entrant to Mongolia’s life insurance industry founded last winter, has just announced that it had appointed Ivan Chak as its chief executive. Mr Chak previously worked as a regional director for AIA and Prudential, two Asian giants, in South Korea, India, Indonesia and Macao.

📌 Mongolian Re to issue IPO. Mongolian Re, a state-backed reinsurance company, announces its intention to issue IPO. The Mongolian government hopes the privatization would make the company more competitive in the face of more established international reinsurers.

📌 Aranjin Resources Seeks Partners for Its Copper Business. Toronto-based Aranjin Resources wants to bolster its copper-extraction business in Mongolia as it seeks for potential partners in China. The company owns the Sharga and the Bayan Undur copper projects.

⭐ TOP NEWS

• Why 2023 is the year to visit Mongolia (CNN)

• Mongolia in the middle of the Russia–Ukraine war (East Asia Forum)

• Implications of Dalai Lama Identifying New Head of Tibetan Buddhism in Mongolia (The Diplomat)

• I ran a 100-mile ultramarathon in Mongolia, and you should too (T3)

• Steppe Gold reports strong rise in 2022 revenue as it moves forward with Phase 2 Expansion at ATO mine in Mongolia (Proactive Investors)

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Editor: E.Zolbayar
Writer: Ch.Anuun, A.Bilguun, A.Tuvshinzaya

Disclaimer: The information "Inside Mongolia" provides is for educational and informational purposes only. It is not intended to be and does not constitute financial advice, trading advice, or any other advice. The decision whether to take into account the information we provide is solely our readers' independent decision.