Lippo Malls REIT (LMIR)

[Greenrookie]

Research report:
https://cimbequityresearch.cimb.com/EFAO...37E&A=CIMB

A bit disappointed that the 22 pages did not go into the specifics of each mall, especially Lipuit Village, and the fall in DPU QoQ as estimated by the latest advance distribution

My thoughts on the Kemang acquisition. Apparently, my feel on the bloggerphere is investors are pissed and giving it thumb down. I think otherwise leifrom blog)

The Kemang acquistion deal has more details.

Discount rate of 8.4% vs a lower dilution of 4.8% (for 40 mio raised instead of the initial planned 110 mio), seem excessive to me. Apparently, Mr market agreed in the morning.

While I appreciate the lower dilution and the utilisation of cash from the 2013 placement, there are also more questions that need to be answered.

About 100 mio is raised in the last placement, more than enough to cover the 70 mio difference the initial placement exercise want to raise.

So altogether, 170 mio of cash(excluding the 40 mio and consideration units to be issued) need to be set aside for this acquisition. Looking the Q3 cash level of 223 mio. it seems that the lower dilution is a pleasant surprise.

However, the pleasant surprise is offset by a nasty surprise of only 0.55 cents of advance payment. while it is not confirmed, lets assume the full quarter of distribution is 14% higher (13 days more out of 90), which is 0.62 cents. It is still an almost 10% fall in DPU QoQ from 0.69 cents.

The Pluit Village effect coming into play?

Looking at the currency exchange for the past 6 months, hardly any big swing to answer for that lower distribution



I almost wanted to accumulate at the lower price, until the lower distribution caught my eye.

A quick calculation:

Total dilution from equity raising and consideration shares will be about 10%.

So, 0.55 cents could be a conservative new normal QoQ DPU going forward for the next 1-2 quarters with all the one-off costs causing more downward pressure.

Assume 15 mio increase in NPI for distribution, yearly DPU should 2.75 cents, which translate into a yield of 7.9 % annually.

Seem not too bad a deal if you ask me.




http://sillyinvestor.blogspot.sg/2014/12...e.html?m=0

[chezball]

Hi all,
Recently I just did a quick analysis on LMIRT thought to be a good opportunity to get in around $0.36. Yes, their track record is not very good. Felt sorry for the current shareholders.

But I think many can take advantage of the "heavy" selling recently after their issued 300Mil shares.

My quick analysis here: http://www.myweekendinvestment.com/7-rei...g-buy-one/

[Dividend Hermit]

Hi all,
Recently I just did a quick analysis on LMIRT thought to be a good opportunity to get in around $0.36. Yes, their track record is not very good. Felt sorry for the current shareholders.

But I think many can take advantage of the "heavy" selling recently after their issued 300Mil shares.

My quick analysis here: http://www.myweekendinvestment.com/7-rei...g-buy-one/

If management does not have good track record, one need to be mentally prepared that they may continue to give "advantages" to new investors.
There are plenty of other REITs to choose from. Just saying...

[shuoyanz]

https://www.techinasia.com/gift-card-ind...overeigns/

“We intend to pull together our retail synergies across Hypermart, Matahari, Lippo Malls and other businesses to accelerate growth and solidify GCI’s market dominance,”

My thoughts: indirectly, this will benefit Lippo Malls if these gift cards become the market leader. Just like if someone gave you Capitamall vouchers, you would have to spend your money at one of the Capitamalls.

[valuestalker]

https://www.techinasia.com/gift-card-ind...overeigns/

“We intend to pull together our retail synergies across Hypermart, Matahari, Lippo Malls and other businesses to accelerate growth and solidify GCI’s market dominance,”

My thoughts: indirectly, this will benefit Lippo Malls if these gift cards become the market leader. Just like if someone gave you Capitamall vouchers, you would have to spend your money at one of the Capitamalls.

But at whose costs?
It is interesting to look at the structure of Lippo Group.

Lippo Group owns Hypermart & Matahari which are the 2 major tenants in most (if not all) Lippo Malls.

So in bad times, it serves as buffer to fill up most of the vacant spaces Lippo Malls throwing out. At (hopefully reasonable) lower rental rates?

In good times, when Mall spaces are limited (as per current situation in Jakarta, esp the higher end malls), can Lippo Malls raise the rental rates significantly?
Or can they replace Hypermart & Matahari with other higher end brands if they would like to reposition or gain higher rentals? The answer is probably No.

So it is a rather peculiar case, because in efficient market, we'd think that the entities are (or should be) totally independently managed.
But in real world, that might not be possible.

If you own an office building and you rent few floors to your siblings to do business.
It seems to me that it's always harder to charge them higher in good times than to cut the rentals when times are bad.
Or maybe it is only me?

Just my 0.05 Rupiah.

(Not Vested)
Just thinking out loud from my experience investing in several Mall owners in Indonesia.

[specuvestor]

^^ i concur with Dividend Hermit. Lippo reputation precedes them. I've learnt to discipline myself over the decade that there are certain stocks i am not smart enough to touch and emotionally indifferent even if it jumps 10-folds

[Greenrookie]

Part of lippo tenants pay GTO rents, I have write to IR to ask the % of GTO, and got no reply. From lippo ( parent )AR or presentation, can't remember where I read it, but it confirm that Mathanari is one those paying GTO rent.

So in a certain way, the difficult to rise rent in good times and easy to cut during bad do not apply here. It's both way, good time pay more, ( but maybe still less than others) and in bad time pay less.

Vested and biased
(Top holding in my portfolio)

[Greenrookie]

From my blog, the workings served as a counter check to my first calculation, just look at final numbers

Lets do number crunching.

I want to know the impact of Kemang Village to distribution.

Before 17 December,

Distribution = 0.57 cents (Higher than projected)

Hence, 0.57cents * 2462648552 (no.of units)= $14037096

That is for 77 days, assume no seasonality effect within a quarter,

The second distribution, LMIR existing portfolio would contributed $2369899 for 13 days

Kemang Village will then be:

0.14 cents* (2462648552+117647000(equity shares placement entitled to distribution) minus $2369899

= $1242514

That is Kemang impact for 13 days. Do it for 30 days it will be

$2867340


So the new 30 days distribution for enlarged portfolio going forward should be $19274335

Total enlarged base of units including consideration shares will be 2701802668 units

Going forward, the distribution would still be 0.713 cents.

If this is really the case, then Kemang will be accretive!

However, in its latest presentation, LMIR no longer break down the occupancy of the malls.

If you use simple proportionality logic and look at its operating numbers, without Kemang, the portfolio is HARDLY shrinking or growing.

However, the IDR impact might be more favourable going forward.

Finance expenses is reduced, if this is not volatile, it will be another plus for Alvin

So, any regrets trying to catch a falling knife?

I do not have, looking at the results, I think the new CEO passed his first acquisition test.

[DCF]

They also share the rental reversion trend, and it is good to see that it is more than 10% for the past 8 quarters. if the exchange rate stay, then this is a very good growth stock

[sgpunter]

19 million shares married deal at $0.345 today --> $6.555m trade

Lippomalls is another potential turnaround stock in my opinion. (Avi-Tech & Fu Yu are others in my view)

Bugbear for Lippomalls has always been the weak rupiah but suggestions by Indonesian Central Bank is that they are going to put out measures to ensure the rupiah does not weaken anymore. How successful the measures will be remains to be seen of course but of course, this is a potential catalyst for Lippomalls.

Share price has punished significantly since May 2013 and currently trading near 5 year lows but with the recent acquisitions and fund raising having been completed, there does not appear to be much visible downsides risks remaining in my opinion.

Currently trading at an attractive yield of 7.886% and price to book of 0.8226, this is one Reit that I feel is worth keeping an eye on in the sea of overvalued Reits at this moment.