In early May, Lippo Malls Indonesia Retail Trust (SGX: D5IU) reported its 2018 first quarter earnings update. As a quick introduction, Lippo Malls Indonesia Retail Trust is a REIT with a portfolio of 23 retail malls and seven retail spaces across Indonesia.
Here are nine things investors should know about the REIT’s latest results:
1. Gross revenue for the quarter grew 1.1% to S$49.12 million, but its net property income declined by 4.6% to S$43.95 million.
2. The distribution per unit (DPU) did way worse, falling by 24.7% year-on-year to 0.67 Singapore cents.
3. Based on Lippo Malls Indonesia Retail Trust’s annualised DPU of 2.68 cents and its closing unit price of S$0.32 as of 15 May 2018, the REIT has an annualised distribution yield of 8.4%.
4. As of 31 March 2018, the REIT’s gearing stood at 35.0%, which is a safe distance from the regulatory ceiling of 45%.
5. The REIT’s occupancy rate stood at 94.0% at the end of 2018’s first quarter, compared to the industry average of 84.8%.
6. The weighted average lease to expiry profile (by net lettable area) of the REIT was at 4.06 years as of 31 March 2018.
7. The average rental reversion rate for Lippo Malls Indonesia Retail Trust’s portfolio in 2018’s first quarter was a positive 5.3%.
8. Lippo Malls Indonesia Retail Trust has the right-of-first-refusal to acquire the properties of its sponsor, which is PT Lippo Karawaci Tbk, one of Indonesia’s largest listed companies. Lippo Karawaci currently owns and/or manages 47 malls and has another 38 malls in the pipeline.
9. In its latest earnings update, Lippo Malls Indonesia Retail Trust gave some useful comments about its future outlook:
“Growth prospects for the Indonesian economy remain strong, with the World Bank projecting GDP growth of 5.3% in 2018, driven by more robust investment and exports, while private consumption is expected to receive a boost from continued moderate inflation and lower consumer lending rates. While Indonesia’s inflation edged up slightly to 3.4% in March from 3.2% in February, it remained well in the range of the Central Bank’s target range of approximately 2.5%-4.5%. Full-year inflation is expected to come in at 3.5%.
On the retail front, Indonesia’s retail sales grew 1.5% in February 2018 from a year ago, reversing a contraction of 1.8% y-o-y in January 2018. Based on Bank Indonesia’s Retail Sales Survey February 2018 of 700 retailers in 10 major cities, it is projected that March retail sales would rise by 1.7% on an annual basis.”
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