LIPPO MALLS INDO RETAIL TRUST
• Weak IDR drags down results
• Repaid S$147.5m facility
• Maintain HOLD
4Q13 A MISS
4Q13 gross rental income contracts 4%
LMIRT’s 4Q13 results were significantly below ours and the street’s expectations. FY13 DPU of 3.25 S cents formed only ~93% of ours and the street’s prior estimate. LMIRT reported 4Q13 gross rental income of S$33.9m, down 4.0% YoY. Net property income (NPI) was S$31.1m, down 5.5% YoY. 4Q13 average IDR/SGD rate depreciated 15.4% YoY, pulling down the results. In IDR-terms, 4Q13 gross rental income and NPI increased by 13.5% YoY and 11.7% YoY respectively. Distributable income fell by 14.6% YoY to S$13.8m and 4Q13 DPU contracted 24.3% YoY to 0.56 S cents (down 36% QoQ).
LMIRT’s NAV has fallen from S$0.4528 at end-Sep 2013 to S$0.4115 at end-Dec 2013. For FY13, gross rental income rose by 16.5% YoY to S$153m, chiefly due to the six malls acquired in 4Q12. FY13 DPU is 10.2% higher YoY.
The S$147.5m loan facility with all-in-cost of 6.77% p.a. that was set to mature in Jun 2014 was repaid in Jan. Recap that a S$150m 4.25% fixed rate note was issued on 4 Oct 2013. It is scheduled to mature in Oct 2016. Finance expenses jumped in 4Q13 by 37.5% YoY to S$9.0m due to the note issued last Oct and the S$75m note issued in Nov 2012. 4Q13 other losses was S$1.0m, versus S$0.2m a year ago, mainly due to a realised loss on FX of S$1.4m.
LMIRT's portfolio had an average occupancy of 95.0% as at end-Dec 2013. This is higher than the industry average of 81% (according to the 3Q13 Colliers report for retail properties in greater Jakarta). Weighted Average Lease to Expiry (by NLA) as at 31 Dec 2013 was 4.94 years. Average rental reversion for 4Q13 was 11.1%.
Adjusting our assumptions, including raising our cost of equity assumption from 10.1% to 10.6%, we reduce our FV from S$0.45 to S$0.39. Maintain HOLD. We estimate a FY14F yield of 9.2%.
Publish date: 17/02/14