Saturday, April 26, 2014

AR review of Lippomalls and APTT

Lippomalls and APTT are the only 2 leveraged plays (Trusts and Reits) left after I divested HPHT and Sabana Reit.

Here are my thoughts:


Get ready for sub-par performance of DPU in the short term. Management think IDR will continue to be volatile. However, in the medium term, Lippomalls still have a few things going for it. Which I think explain the resilience of its share price.

1) Acquisition: Its parents has only 3 malls that is under the First Right of Refusal arrangement. A check on the parents Lippo Malls website show all three are in the pipeline, and are not operational yet, although the AR mention the word "some" instead. Given its limited room before hitting the debt ceiling, unless Lippomall is buying malls that are out of the first right of refusal arrangement, I do not think it will happen anytime soon. Personally, I would rather Lippo buy a good mall when the IDR is weak.

2) Recovery of IDR. Self explanatory. If IDR is strong, revenue converted to S$ in higher, and valuation of property improve. Management expect IDR to continue to be volatile and will hedge more aggressively. Hope they get the direction of IDR movement right.

3) Favorable demographics and economic growth of indonesia, Indonesia consumption story still intact.


Pluit Village, one of the worst performing mall, and sadly also one of the biggest contributor of revenue to LMRT will no longer need to give rental guarantee in 2014 onwards. The rental guarantee for the whole of 2013 is about 5.4 million (5.6 million in 2012), we will need to subtract about 1.4 million from NPI every quarter assuming the rental collection is Pluit stays status quo, which is very likely the case. The one-off cost of 2.2 million for issuing the MTN notes cannot offset this amount.

IDR improve 6% to 31 march in 2014, according to AR. While this is welcomed news, the fate of IDR for the year of 2014 is just to hard to call.

Personally, I think we need to buckle up for poor performance of LMRT in 2014.


Not much to update, earning story remain intact, the broadband segment will be the key segment to watch for upside in the near term, further into 2015, we will need to see how they captured the market in Greater Taichung.

Most disappointing however, is the projection that a written settlement of tax issues did not materialized in Q1 (which is the timeline proposed by management at Q4). They now expect tax settlement to be reached in 2014. The longer this drags, the less faith I have with this counter. Was thinking of accumulating on weakness, think I will hold my fire for now.


  1. Thanks for sharing. I notice Temasek is buying into this counter lately and now become substantial shareholder. Perhaps this is a vote of confident? I follow suit and vested u this stock since, similarly to Olam case.

  2. Hi PY

    Beside temasek, another substantial investor has emerged. But it is a fund owned by multiple party.

    Adrian, the guy that buys PTC logistic like mad in 2011 is also the top 20 shareholders.

    But seriously, it's shareholder base is nothing to shout about, Macquarie stake is only a miserable 3%, which is a major bugbear to me. Also Macquarie record is really horrible, their CEO is a finance guy, but luckily, the chairman is someone previously form starhub and work as a VP at Singtel before.

    Lets hope Macquarie don't mess up the tax settlement issue. There is strong selling whenever there is demand, and he price always end up nowhere.

  3. Yup, agreed, i invested cautiously with small stake and see how the management perform. Happy investing.

  4. Yup,

    Happy to see a fellow shareholder, u going for the AGM tomorrow?

  5. I will not attend due to work commitment :) cheers

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