Stable Results, Continue to Enhance its Assets
Intrinsic Value S$0.650
Prev Closing S$0.500
Lippo Malls Indonesia Retail Trust’s (LMIR) 2Q results were within expectations (+/-1%) and virtually a replicate of its 1Q numbers. 1H FY13 NPI and DPU now form 49.6% and 50.1% of our FY13F.
Approximately 4.3% of the leasable space was renewed this quarter with a positive rental reversion of 15.5%. Pluit Village saw a rise in occupancy rate due to the entry of Carrefour while Ekalokasari Plaza suffered a decline due to AEI development. The overall mall occupancy rate rose 1.6% QoQ to 94.4%. LMIR will continue to enhance its assets performance and may look to acquire one or two assets towards the end of the year. The company is also exploring its options on refinancing its S$147.5m term loan.
Given LMIR’s expected set of results, we are leaving our FY13F and FY14F intact – though there may be some upside risk due to higher occupancy rate. Maintain Increase Exposure with an intrinsic value of S$0.650.
• NPI rose 23.2% YoY (1.6% QoQ) mainly due to the new assets and some rental reversion. Meanwhile finance expenses inched up 1.8% QoQ to S$7.2m while there was some one-off gains due to indemnity recovery from vendor of Pluit Village ( S$0.7m, due to litigation case with Carrefour) and vendor of Palembang Square and Binjai Supermall (S$0.8m, delay in asset enhancement). Consequently, PBT rose 14.1% QoQ to S$29.6m. DPU for the quarter stood at 0.93 S cent, 0.04 S cent higher than the prior quarter.
• Cashflow from operating activities was S$35.9m due to positive working capital from trade receivables (S$4.6m) and payables (S$2.1m). There is a S$147.5m term loan that is poised to mature in June 2014. Management is exploring its options now but we do not see any refinancing risk given current low interest rate environment and that LMIR’s gearing is only 24.2%.
Assets Update: On the asset level, Pluit Village enjoyed an 11.2% QoQ jump in occupancy rate to 86.7% as Carrefour has moved into the property and assisted in the traffic flow. Ekalokasari Plaza experienced a 8% QoQ decline in occupancy rate to 79.9% as the property is currently undergoing AEI to build a link way, expand the carpark space and others. The period will be around one to two years and carried out in several phases. Management commented that the AEI is necessary to keep the asset competitive and relevant to shoppers. Measures will also be taken to minimize the impact on existing tenants. AEI at Binjai Supermall and Palembang Square are ongoing and estimated to be completed within this year. Overall, the mall occupancy rate rose 1.6% QoQ to 94.4%. As the management continued to enhance the assets performance, they do not rule out the possibility of acquiring one or two assets towards the end of the year.
Refinancing Issue: LMIR’s S$147.5m term loan will mature in June 2014 and management has started to look at the available refinancing options and received several proposals from the banks. They can also choose to issue MTN notes.
Forecast and Valuation: We are keeping our FY13F and FY14F intact, though there may be a slight upside surprise on the top line due to higher contribution from Pluit Village and rising occupancy across its assets. Maintain Increase Exposure with an intrinsic value of S$0.650.
Publish date: 02/08/13