In my previous article, I covered eight long-term growth drivers Hatten Land has in its favour and why the stock is in my portfolio. But as with any investment, there are always risks to consider. It is financially dangerous to invest in anything without exploring the possible downside.
So in this article, I want to balance the views I shared in my first article and list four risk factors you need to know about Hatten Land:
1. Prolonged recession and counterparty risk
A prolonged recession will impact Hatten’s financial position, and potentially compromise the integrity of its sale-and-leaseback scheme. The current economic upswing will come to an end one day, and when the economy sinks into a recession, Malacca’s tourist numbers and its investors’ confidence will definitely be affected. This will directly affect take-up rates of Hatten’s new properties, reducing the company’s revenues and affecting its financial position.