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Analysts: Indon Retail Growth To Push LMIRT Upwards By 18%
Aspire, Hot Picks | 09 January 2015
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By: Raymond Leung
Articles (142) Profile

Analysts updates on Lippo Malls Indonesia Retail Trust

With the rising private consumption in Indonesia, local and international retailers are both vying for the increasingly growing market. The rise of a growing pool of middle class consumers in Indonesia is attracting local and international companies to grow aggressively in Indonesia’s retail segment.

As new supply for retail properties remains limited amid robust demand from retailers, landlords have stronger price control for rental rates. Average rental rates in Jakarta rose 3.3 percent quarter on quarter (QoQ) and 5 percent year on year (YoY).

With more than half of its portfolio in Jakarta, Lippo Mall Indonesia Retail Trust (LMIRT) is well positioned to reap from the growth of the retail market. Furthermore, LMIRT made the initiative for growth through asset enhancements and reshuffling of tenants to include higher yielding specialty stores and mini-anchor tenants.

LMIRT has recently proposed for the acquisition of Lippo Mall Kemang, a five storey shopping mall located in South of Jakarta. The sale consideration for the mall is $385.7 million and is expected to increase LMIRT’s income by an estimated 2.6 percent and the total asset under management value by 1.6 percent.

LMIRT is expected to pay $386 million for Lippo Kemang

The leverage ratio for the trust is estimated to rise from the current 28.3 percent (as at 30 June 2014) to 34.5 percent. This will give LMIRT some headroom for future acquisition from its sponsor, Lippo Karawaci, one of the largest property developers in Indonesia.

Lippo Karawaci has a pool of good quality asset which LMIRT has the Rights of First Refusal to.

However, a downside to the trust may come from the turbulent currency conversion of the Indonesian Rupiah against Singapore Dollar.

Analysts from CIMB Research gave LMIRT a “Buy” call with a potential upside of 17.65 percent. They cited that the trust is trading at 9.3 percent of FY15 dividend yield and an attractive price-book value of 0.86 makes LMIRT attractive despite the risk from currency conversion.

Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

Lippo Malls Indonesia Retail Trust  0.230 -0.010 -4.17%   
Business: REIT that is engaged in invs in retail ppties in Indonesia.

Insight: Apr-19, 1Q19 gross rental income slid 7.1% due to ... Read More

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