LIPPO MALLS INDO RETAIL TRUST
D5IU.SI
Lippo Malls Indonesia Retail Trust - Boosted By Acquisitions
- LMIRT's results in line, 2Q/1H DPU makes up 25%/50% of our FY17F forecast.
- Enjoyed a 13% rental uplift on renewal in 2Q.
- Acquisition of LPK to boost earnings from 2H, in our view.
- Active capital management, gearing at a healthy 30.6%.
- Maintain Add but tweak our DDM-based TP higher to S$0.43.
2Q results highlights
- LMRT reported a 2Q DPU of 0.9 Scts, +5.9% yoy. The improvement is underpinned by a 6.6% increase in revenue, thanks to positive rental reversion and new acquisitions.
- Results are in line, with 2QFY17 and 1HFY17 DPU making up 25% and 50% respectively of our full-year estimate.
Positive rental reversion on renewal
- The trust enjoyed a 13% rental uplift for the 7,948 sqm (1% of total portfolio) NLA that was renewed in 2Q. This had extended its portfolio WALE to 4.32 years, with a balanced mix of long-term anchor leases and shorter-term non-anchor tenants to drive growth going forward.
- The trust has a remaining 18% of NLA to be renewed in 2H17 and 13% of NLA to be renewed in FY18.
- Committed portfolio occupancy remains at a high 94.3%.
Acquired Lippo Plaza Kendari
- 2Q earnings also benefited from additional contributions from the purchase of Lippo Mall Kuta in Dec 16.
- LMRT had recently acquired the Lippo Plaza Kendari (LPK) for Rp310bn (S$33.2m) in Jun 17 and expanded its portfolio NLA by 2.5%. LPK has a good tenant mix including Matahari Department Store, Hypermart, Solaria and Cinemaxx. On an annualised basis, we estimate that LPK could boost gross revenue by 1.5-2%.
Capital management
- LMRT’s gearing stood at a healthy 30.6% as at end-2Q17. Post the issuance of S$120m of 5-year 6.6% perpetual securities in Jun 17 and the partial pre-payment of S$55m of secured loans, gearing is anticipated to be reduced further to 28.1%. This puts the trust in a strong position to tap inorganic growth opportunities.
Maintain Hold
- We lower our FY17-19F DPU estimates by 3-3.4% post results as we moderate the forward rental reversions outlook. However, we tweak our DDM-based TP higher to S$0.43 as we update our risk-free rate assumptions.
- Following the recent share price run-up, LMRT has been trading at 7.8% FY17 DPU yield or at its average long-term yield.
- The stock offers a total return of c.2%. Maintain Hold.
Valuations
- LMRT’s share price has done well in recent months. As such, its forward dividend yield had mean-reverted, trading at close to its historical average yield of 7.9%.
- In addition, its P/BV multiple of 1.23x is the highest in the post-GFC period. Hence, we find valuations not very compelling at this point. Maintain Hold.
- Upside risk could come from new and accretive acquisitions, while downside risk could emerge if the rupiah depreciates against the S$ or if there is a slowdown in consumption or retail sales in Indonesia.
LOCK Mun Yee
CIMB Research
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YEO Zhi Bin
CIMB Research
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http://research.itradecimb.com/
2017-08-08
CIMB Research
SGX Stock
Analyst Report
0.43
Up
0.410
