Friday, November 15, 2013

Lippo Malls Indonesia Retail Trust: 3Q13 results in-line (OCBC)

Lippo Malls Indonesia Retail Trust:
air value S$0.45
add: 12m dividend forecast S$0.035
versus: Current price S$0.445
3Q13 results in-line

LMIRT reported 3Q13 gross rental income of S$38.9m, up 13.6% YoY. The increase was mainly due to the acquisition of the six new malls in 4Q12, and positive rental reversions for the existing malls. Distributable income increased by 20.7% YoY to S$19.1m and DPU climbed 19.2% to 0.87 S cents. Results for the quarter were in-line with ours and consensus expectations. 9M13 DPU of 2.69 S cents forms 75% of our prior FY13 estimate. On 4 Oct, under its MTN programme, LMIRT issued S$150m 4.25% notes due 2016. Management indicates that it may use the money raised to refinance the S$147.5m term loan due Jun 2014 or to make acquisition. It currently has a potential target in mind. Adjusting our model slightly to incorporate higher finance expense from the S$150m notes issuance and lower cost of equity assumptions (9.7% instead of 10.8%), we raise our DDM-based FV to S$0.45 from S$0.44. Maintain HOLD. We estimate a FY13F yield of 7.8%.


3Q13 as expected
LMIRT reported 3Q13 gross rental income of S$38.9m, up 13.6% YoY. The increase was mainly due to the acquisition of the six new malls in 4Q12, and positive rental reversions for the existing malls. Distributable income increased by 20.7% YoY to S$19.1m and DPU climbed 19.2% to 0.87 S cents. Results for the quarter were in-line with ours and consensus expectations. 9M13 DPU of 2.69 S cents forms 75% of our FY13 estimate. Due to weakening of the IDR, NAV fell 20.1% QoQ to 45.28 S cents as of end 3Q13.

FX hedges in place
Management is looking to hedge 80-85% of distributable income using options, up from 65% earlier this year. A long-term forward-based hedge which expired in May was replaced with options, and management intends to do the same for another hedge which expires in the middle of this month. Compared to the average exchange rate over 3Q13, the SGD has strengthened 6.4% against the IDR for 4Q13 so far, with SGD1 buying an average of IDR8947 from 1 Oct to 6 Nov, compared to an average of IDR8410 over 3Q13 (Bloomberg).

S$150m notes issued in Oct
Gearing climbed from 24.2% in 2Q13 to 28.2% in 3Q13, chiefly due the fall in value of the investment properties in SGD terms. Management seeks to have an average gearing of 30% over the medium-term. On 4 Oct, LMIRT issued S$150m 4.25% notes due 2016. Management indicates that it may use the money raised to refinance the S$147.5m term loan due Jun 2014 or to make acquisition. It currently has a potential target in mind. Separately, management is speaking with a developer about developing an extension for Ekalokasari Plaza. Some tenants have not been renewed and others have been relocated, resulting in a drop in occupancy. Note that Ekalokasari accounts for only 3.6% of the portfolio by NLA.

Maintain HOLD
Adjusting our model slightly to incorporate higher finance expense from the S$150m notes issuance and lower cost of equity assumptions (9.7% instead of 10.8%), we raise our DDM-based FV to S$0.45 from S$0.44. Maintain HOLD. We estimate a FY13F yield of 7.8%.


Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 07/11/13

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