Lippo Malls Indonesia Retail Trust: 3 Things Investors Should Know From Its Latest Earnings
Lippo Malls Indonesia Retail Trust (SGX: D5IU) is the first and only real estate investment trust in Singapore’s stock market that focuses on Indonesian retail properties. It was listed nearly 10 years ago on 19 November 2007.
As of 31 December 2016, the REIT has 20 retail malls and seven retail spaces in its portfolio. They are all located in Indonesia.
In early May, Lippo Malls Indonesia Retail Trust reported its 2017 first quarter results. Let’s look at three useful pieces of information investors may want to know from the announcement:
1. The overall result
The table below shows some important items from the REIT’s income statements for the first quarters of 2017 and 2016:
Source: Lippo Malls Indonesia Retail Trust 2017 first quarter earnings release
It was a good quarter for the REIT as its gross revenue, net property income, distributable income, and distribution per unit all exhibited high single-digit or low double-digit growth.
2. The rental reversion rate
Here’s a chart showing the rental reversion rates of the REIT since the first quarter of 2011:
Source: Lippo Malls Indonesia Retail Trust 2017 first quarter earnings presentation
What’s useful to know here is that the REIT’s rental reversion rates have ranged between 5% and 27.1% over the past six years. That’s a strong record and points to the REIT’s ability to increase its rent over time. In the first quarter of 2017, the rental reversion rate was 7.5%.
3. What lies ahead
As investors, we rely on many tools, including management’s forecasts, to help us gain insight on what to expect for the near to long term performance of our investments’ business.
In the case of Lippo Malls Indonesia Retail Trust, it shared a few comments on its market conditions in its earnings release:
“The fundamentals of the Indonesian economy remain strong, with a robust rate of economic growth. For 2017, the World Bank is projecting a growth of 5.3%, supported by more robust private investment following monetary easing in 2016 and ongoing investment climate reform. The continued stabilisation of commodity prices, inflation and the Indonesia Rupiah will further bolster growth…
… Indonesia’s annual average growth in retail sales fell from December’s 11.0% to 10.4% in January 2017. FocusEconomics Consensus Forecast participants see private consumption rising 5.2% in 2017.”
It’s clear that Indonesia’s economy and retail are both projected to grow in the year ahead. Meanwhile, Lippo Malls Indonesia Retail Trust’s sponsor – PT Lippo Karawaci Tbk, Indonesia’s largest listed property company – has 46 retail malls in its portfolio currently and has plans to bring its total malls under management to over 80 by 2030. The malls under PT Lippo Karawaci are potential acquisition candidates for Lippo Mall Indonesia Retail Trust in the future.