Friday, December 26, 2014

Lippo Mall Indonesia Retail Trust - My CNAV Analysis

I am still looking for my first REITS counter for my portfolio, mainly for dividend investing. Among the different types of REITS, I am more keen on the Retail REITS. Reason? Just personal preference as retail (shopping) is more visible and predictable, as compared to other REITS.  

As per my earlier S-REITS compilation (click here to see the details), there are only 8 Retail S-REITS to choose from (see list below). Since my main focus is for dividend investing, hence Lippo Malls Indonesia Retail Trust (LMIR Trust) [D5IU] is naturally the first choice for me to the CNAV Analysis.
Retail S-REITS
So here we go...

Stock In Evaluation : Lippo Malls Indonesia Retail Trust (LMIR Trust) [D5IU]

The Key Quantitative Indicators of CNAV Strategy (basing on 2013 Annual Report figures):

Net Asset Value (NAV) = $0.410
Conservative Net Asset Value (CNAV2) = $0.404
Current Price = $0.34
Discount For CNAV2 = 16%

Conclusion : Since it is a POSITIVE "Discount for CNAV2", it means that the stock is traded at a discount (from CNAV perspective). 
The P.O.F Scores of CNAV Strategy:
Profitability Score = 1 (With the PE ratio of 10.7)

Operational Efficiency = 1 (positive cash flows)

Financial Efficiency = 1 (Debt To Equity Ratio of 80%, bearing in mind that this is a REIT, higher Debt To Equity is expected)

Conclusion : A perfect P.O.F Scoring.

Additional Notes : One important element about investing in REITS with properties in foreign land is the forex risk. The current development currency exchange between Indonesia Rupiah and Singapore Dollars is not to be benefit of the investors. Having said that, we can always rely on a reliable management to hedge the currency risks
 
Final Conclusion : From CNAV Strategy perspective, this is definitely one of the stock fitting the bills. I am a bit kiasu and looking for more buffer/discount, am queuing for $0.33 ;-)

Cheers!
 

19 comments:

  1. Okay. I buy 1 cts lower than you @ $0.32

    Good luck to you and then to me. LOL!

    ReplyDelete
    Replies
    1. CW8888 : No "luck" for me as never got it today, will try again next week and hopefully after that, qiong all the way ;-)

      Delete
  2. Welcome to the world of REIT investing. :)

    ReplyDelete
    Replies
    1. SRSI : yayaya! Will follow your blog more regularly too.. Do keep the great stuff coming

      Delete
  3. Wow interesting analysis, i believe since that time price dropped i believe alot ppl already bought it. u missed the Dec 2014 dividends already but nvm lets move on to the future! the dividend yield used to be very high (up to 15%) and has paid for few years more than 10%. ill follow u to buy this at 0.325!! good luck to 3 of us!!

    ReplyDelete
    Replies
    1. Jfree : let's hope next week will have better chance ;-)

      Ya, among the retail REITS, LIPPO has the best dividend yield so far

      Delete
  4. Its price kept moving lower this year while most other reits price advanced.
    To me, it is too funny to compare this counter with quality SG focused retail reits, CMT, SPH, etc.
    Too many uncertainties for this counter. The exchange rate risk compounded with the valuation risk when interest rate goes up.
    The NAV is not a fixed value. The higher yield is a compensation for its risk.

    ReplyDelete
    Replies
    1. Richard Chu : thanks for dropping by and comment. Agree with ur view on the uncertainties element but I guess it will be compensated with higher dividend yield, as u mentioned, which happens to be the key reason for investing in REITS ;-)

      Delete
  5. Hi Richard,

    Do set aside 100% of the dividend received to a set aside for possibility of rights issues. If u want more, then put aside 500% of dividends received for rights. Don't play with reits without the ability to participate in rights exercise! Good luck :)

    ReplyDelete
    Replies
    1. LP : thanks for the heads up! Will remember that...

      Delete
  6. Hi Richard,

    I was vested with LMIR too with my most recent purchased @0.32. Hope to get your shares soon...best of luck next week.

    ReplyDelete
    Replies
    1. David : good for u! I am still waiting lol

      Delete
  7. Look at the current market and ask how come still high yield?

    Is our Method Known Known or We know What they don't know?

    ReplyDelete
    Replies
    1. Uncle cw8888 : your cryptic comment comes again! Can make it more layman term please? Lol

      Delete
  8. Hi Richard,

    Always like your short and sharp analysis. Hope you'll get it at the price you want. Good luck!

    ReplyDelete
    Replies
    1. Secret investors : thanks for dropping by. I guess it is because personally I like to read short article too! ;-)

      Delete
  9. Retail REITS survival in the long term depends on mgt of the REITS. You just need to see badly run shopping malls with few customers to know that good management is important.
    Hence, even if current numbers are good but you can see shopping mall is not run well, has low traffic etc. it will be only a matter of time when the results will go down.
    Visit Lippo malls to take a look before you pump in a lot of money.
    Compare with CMT and how every few years, they renovate and change tenant mix or squeeze out more lettable area out of a property or buy over another nearby mall to generate some synergies from the combined two malls etc. These are the signs that a REIT will do well and last.

    ReplyDelete
  10. Another factor is growing importance of eCommerce. Those retail REITS that still have tenant and customer mix that will do badly with rise of eCommerce will suffer.
    Neighbourhood malls attached to MRT with supermarket and eating outlets will probably still survive to some extent as the brick-and-mortar business model will still work in that type of mall.

    ReplyDelete
    Replies
    1. Thanks for dropping by and provide valuable comment.

      Will sure to take note of your feedback ;-)

      Cheers!

      Delete

Like What You See? Subscribe To Us Here...

* indicates required