Wednesday, November 16, 2016

Lippo Malls Indonesia Retail Trust - EGM To Acquire Lippo Mall Kuta, Bali

Last week, received a thick package from Lippo Malls Indonesia Retail Trust, LMIR Trust (can tell from the envelop itself) but didn't open it until today. Apparently, it is a circular in relation to the upcoming EGM for the proposed acquisition of Lippo Mall Kuta, Bali. The purchase consideration is S$85 mil

After attempting to digest the thick pile of sheets and given up after about 10 pages, most of the content are quite technical and lots of jargon here and there. For an existing investors, of course, the first thing that come to mind is the objective and financial upside of such acquisition?

Managed to skim through the pages and found some pertinent information here:

1. Rationale for the acquisition :
a. Provide organic growth potential
b. Opportunity to increase the size and enhance the earnings of the LMIR Trust.
c. Increase economies of scales in operation, marketing and financing.
d. Diversification of asset within LMIR Trust's portfolio to minimise the concentration risk.

2. Some key financials after the acquisition (based on the pro forma financial statements for FY2015):
a. Net Property Income (NPI) will increase by 4.2%.
b. Dividend Per Unit (DPU) will increase to 3.11 cents (from 3.10 cents)
c. Dividend Yield will increase to 9.72% (from 9.69%)
d. Portfolio size will increase by 4.5% (from S$1,830 mil to S$1,915 mil)
e. Net Asset Value (NAV) will remain at 37.86 cents (as at 30 Jun 2016) 
f. Aggregate leverage will increase to 31.1% (from 27.9%), which is still below the leverage limit of 45% (the acquisition is expected to be financed 100% with borrowings)

I will not be attending the EGM, which happens to be on 30th Nov 2016, Wed but personally feel that this acquisition is a timely expansion of the trust and will "silently" giving it a go-ahead :-) 

What is your view about this acquisition? 


No comments:

Post a Comment

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

* indicates required