Ricardo Pillai
4 min read
In This Article:
We came across a bullish thesis on IRSA Inversiones y Representaciones Sociedad Anónima (IRS) on From 0 to 1 in the Stock Market’s Substack by Giuliano. In this article, we will summarize the bulls’ thesis on IRS. IRSA Inversiones y Representaciones Sociedad Anónima (IRS)'s share was trading at $ 14.63 as of 5th June. IRS’s trailing P/E was 7.83 according to Yahoo Finance.
Aerial view of a shopping mall bustling with consumers.
Irsa presents a compelling opportunity as a deeply misunderstood Argentinian real estate operator trading well below the intrinsic value of its high-quality, cash-generating portfolio. At its core, Irsa owns and operates a diversified mix of shopping malls, office buildings, hotels, and development land, mostly in and around Buenos Aires.
Following a five-year corporate simplification, including the 2021 merger with its subsidiary Irsa CP, management has focused on increasing operational efficiency, reducing its office footprint, and redirecting capital into core assets like retail.
Irsa’s 16 malls encompass 370,000 sqm of GLA, generating consistent tenant sales and achieving occupancy rates above 94%. Its dual rent model—base rent plus a variable sales-linked fee—allows income to scale as the economy improves. Despite Argentina’s turmoil, mall gross margins have averaged 90%, with normalized operating margins of 70–75%, reflecting both asset quality and prudent management.
Recent capital deployments affirm the company’s reinvestment discipline. In August 2024, Irsa acquired a parcel adjacent to Alto Avellaneda for $12.2M, with the potential to add $3.47M in after-tax profit plus $1.15M in non-rental income. In December, Irsa announced the acquisition of Terrazas de Mayo, a mall with 33,720 sqm of GLA and an estimated 7 million annual visitors, adding further depth to its portfolio. The company’s selective expansion strategy has historically yielded durable returns, underpinned by long asset lives and prime locations.
Meanwhile, Irsa has actively reduced its office footprint from 115,000 to 59,000 sqm since 2018, monetizing non-core holdings while adding premium inventory like the Della Paollera tower. Its hotel segment, with three long-held properties, rebounded strongly in FY24 with $45M in revenue and a 29% operating margin, supported by resilient domestic and affluent tourist demand.
Irsa’s resilience through multiple recessions and the pandemic stems from its disciplined asset management and high-margin structure. Yet, the market often overlooks this due to Argentina’s macro instability and the noise in Irsa’s income statements from frequent asset revaluations.
