Wednesday, November 12, 2014

LMIR latest results

Again, depreciating IDR affect results. However, ignoring the currency weakness, there are still pockets of concerns to highlight:

1) Pluit Village mall is the biggest mall in LMIR portfolio. It has a drop in occupancy from 87.9% to 81.6%.

2) In IDR, while Gross rent and net rent is stable, it is the third consecutive quarters of YOY fall. This is despite occupancy rate remaining stable and positive rental revision. The cause should then be due to fall in GTO rent. Consumer spending in Lippomalls has not seen any revival.
If oil subsidy get a big cut, it will be good for Indonesia economy, current account and FDI, and perhaps also currency, but it will have a negative impact on consumer spending.

Although there is no info on GTO tenants, my gut feel and guess will be its Sponsor affiliate/ subsidary, Matahari department store, which takes up to 11% of the gross rental income

3) Dilution of shares due to  the pending equity raising. LMIR shares has been trading below 40 cents now, more shares will have to be issued than when they first assume 40.5 cents issue price. If  issue price is 37 cents, there will 10% more dilution.

Conclusion:

The CEO cannot do any share buyback to boast the price before equity raising. The company results while not too bad has no catalyst for price to increase.

Generally, an unexciting results with nothing much to look forward to except the distribution.

2 comments:

  1. Hi Sillyinvestor

    Here is my thoughts on the results.

    Pluit Village mall is their key pillar mall with one of the best producing NPI. Rental guarantee has expired since late last year/early this year so any drop in occupancy is going to hurt their earnings. Binjai Mall is another mall currently with rental guarantee.

    LMIRT has hedged against IDR for two tranches, but they do so with having to pay a lot of fixed cost, which means that either IDR goes up or down, they will still need to pay huge fixed cost which affects the exchange gain/loss.

    FY dividends would come in at about 68 cents x 4. So the yield would have been around 7.3%. Some investors get the impression that this counter is yielding 7.8% based on the proforma details for their purchase of Kemang Mall.

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    Replies
    1. Hi B,

      Thanks for the insight! Which is particularly important since you work there before.

      Ya... Strange I never think of the hedging as a cost...sigh....

      Only have to wait for the appreciation of IDR for the revenue to be significant... IN SGD terms

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