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ALP REIT INVESTMENT CLUB
Lippo Malls Indonesia Retail Trust
(25March2016)) close: S$0.320
12M-Target price: S$0.360
1.) Type of Reit: Retail Reit
2.) Number of property in the portfolio: As at 31 December 2014, LMIR Trust’s portfolio comprises 17 high quality retail malls and seven 7 major retail spaces located within other malls in Indonesia .All of these properties are located in Indonesia with a combined net lettable area (“NLA”) of 781,622 sq.
3.) Top 5 properties that generates the highest revenue (Decreasing order):Sun Plaza (11%) , Pluit village (9%) , The Plaza Semanggi (9%), Pejaten Village (8%) and Bandung Indah Plaza(8%). We can see that the group’s revenue is highly diversified.
4.) Challenges: Falling Rupiah could affect the group dividend distribution when translates into SGD.
5.) Strengths: The economy of Indonesia continues to be supported by burgeoning domestic demand, increasing foreign investment and government infrastructure spending. The middle class continues to grow in number and with higher disposable income whilst the urban population accounts for approximately 50% of the total population. High retail spending growth will continue to support the expectation of double digit retail sales growth for the coming years.
6.) Significant events: Mr. Alvin Cheng, the Chief Executive Officer & Executive Director of the Manager, LMIRT Management Ltd, will be stepping down from the position to pursue his personal and professional interests at end April 2016.
8.) Recommendation: Sell. The undesirable track record from the above table is a source of risk, in the sense that while a weak rupiah may have played a part in the REIT’s shrinking distributions (this is something not within the REIT’s control), it could also be a sign that the REIT may not be the best operators of retail malls around. The most worrying aspect is the declining Interest coverage which indicates that the group has a hard time to finance its debt. Be aware Investors!!
COMPILED BY: Yena
DISCLAMER: Readers should not rely solely on information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.
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