LMIRT posted 1Q13 gross rental income of S$39.4m, up 29.3% YoY. The increase was mainly due to the acquisition of the six new malls in 4Q12, and positive rental reversions for the existing malls. The higher gross rental income was partially offset by the effect of FX rates used for translating into SGD revenues denominated in IDR. Results for the quarter were in line with our and consensus expectations; DPU of 0.89 S cent formed 25% of ours and 26% of the street's FY13 estimate. We maintain our fair value of S$0.52 and HOLD rating on LMIRT. We estimate a FY13F yield of 6.7%.
1Q13 in line
LMIRT posted 1Q13 gross rental income of S$39.4m, up 29.3% YoY. The increase was mainly due to the acquisition of the six new malls in 4Q12, and positive rental reversions for the existing malls. The higher gross rental income was partially offset by the effect of FX rates used for translating into SGD revenues denominated in IDR. Total revenue (equivalent to gross rental income in 1Q13) fell 13.6% YoY due to the inclusion of service charge and utilities recovery income from the malls operational activities in 1Q12. Such activities have been outsourced to a third party operating company with effect from 1 May 2012 and there is also a related decrease in expenses. Results for the quarter were in line with our and consensus expectations; DPU of 0.89 S cent (up 29% YoY) formed 25% of ours and 26% of the street's FY13 estimate.
Financial flexibility
Gearing remains healthy at 24.3%. In addition, ~68% of the S$1.77b portfolio, equivalent to S$1.2b, remains unencumbered, providing LMIRT with financial flexibility for future acquisitions. With the issue of a total of S$325m of SGD notes in Jul and Nov 2012, the average cost of debt of LMIRT has been reduced by ~1% point to 6%. As at 31 Mar, overall occupancy was 93.8%, versus 92.6% as at 31 Dec 2012, and higher than the industry average of 87.4% (Jones Lang Lasalle). According to management, the outlook for quality retail space is expected to remain positive in the next 12 months as both local and foreign retail players continue to be interested in the growing Indonesia retail market in 2013.
Maintain HOLD
We maintain our fair value of S$0.52 and HOLD rating on LMIRT. We estimate a FY13F yield of 6.7%.
LMIRT posted 1Q13 gross rental income of S$39.4m, up 29.3% YoY. The increase was mainly due to the acquisition of the six new malls in 4Q12, and positive rental reversions for the existing malls. The higher gross rental income was partially offset by the effect of FX rates used for translating into SGD revenues denominated in IDR. Total revenue (equivalent to gross rental income in 1Q13) fell 13.6% YoY due to the inclusion of service charge and utilities recovery income from the malls operational activities in 1Q12. Such activities have been outsourced to a third party operating company with effect from 1 May 2012 and there is also a related decrease in expenses. Results for the quarter were in line with our and consensus expectations; DPU of 0.89 S cent (up 29% YoY) formed 25% of ours and 26% of the street's FY13 estimate.
Financial flexibility
Gearing remains healthy at 24.3%. In addition, ~68% of the S$1.77b portfolio, equivalent to S$1.2b, remains unencumbered, providing LMIRT with financial flexibility for future acquisitions. With the issue of a total of S$325m of SGD notes in Jul and Nov 2012, the average cost of debt of LMIRT has been reduced by ~1% point to 6%. As at 31 Mar, overall occupancy was 93.8%, versus 92.6% as at 31 Dec 2012, and higher than the industry average of 87.4% (Jones Lang Lasalle). According to management, the outlook for quality retail space is expected to remain positive in the next 12 months as both local and foreign retail players continue to be interested in the growing Indonesia retail market in 2013.
Maintain HOLD
We maintain our fair value of S$0.52 and HOLD rating on LMIRT. We estimate a FY13F yield of 6.7%.
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