- Yield = 8.72%
- Price-to-book Ratio = 0.852
- Assets per unit = $0.73
- Debt per unit = $0.337 (including current liabilities)
- Gearing = 46.2%
If they sell LMK, they will lose about 25% of their income which means I need to give their yield a 25% discount as well. Thus, their yield will drop to 6.54% which is terrible. However, they will receive cash of about S$360 million, which translate to a $25 million loss due to IDR currency drop against S$. I am quite sure that they will use some of the money to pay off some debt as they acquired some debt to purchase this. Yield will increase but not too sure by how much. My guess is probably at 7.5% which is still not fantastic considering that it is Indonesian-based. And, there are some money which they have raised via rights issue for this which now I am not too sure what they are going to do. They can pay debt, return to investors, or buy a new property.
If they are to sell LMK, as investors, we need to know what they are going to do with the money which is coming in so that we can evaluate whether LMIR is still a good enough investment for us. I hope that they already have plans on what to do with the money which will be beneficial to us investors. Will be watching this closely as I am vested with 30,000 shares.
Hello comrade LMIR investor
ReplyDeleteThank you for telling us of your analysis.
I have also look at the announcement but my analysis is more optimistic than yours :
(1) please note put price will be higher of IDR3,600 billion or valuation of two independent valuers. So, assume IDR3,600 billion, the price approximate at IDR 9600 is SGD375M;
(2) the final price for kemang on December18 announcement was SGD362M. So, if sale now, LMIR gains maybe SGD13M;
(3) if read circular October 22, I find the LMK leases of three years maybe 50% of revenue. So the LMK leases are very high but only 3 years. what will happen after 3 years ?
So, we investors must force LMIR to take chance to return LMK. I have friend live near Kemang and the mall is low traffic.
I also think of what to do with the money, but why not repay debt ? You calculate for us gearing ratio of 46.2%. So, it will be good to repay debt and not breach 35% limit for S-Reit ? If not repay debt, LMIR will need to have rights issue to bring down gearing ?
Maybe LMIR can buy investment in other S-Reit to maintain return (I think allowed).
Hope LMIR will do right thing for us investors and put back Kemang.
Joseph, thank you for generously putting up your hard work analysis on each individual REITs. I hold more shares than you in Lippo Mall Retail Trust and bought at a higher price, $0.41 but I'm NOT going to sell it yet.
ReplyDeleteAbishan, thank you also for your input.
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