Lippo Malls Indonesia Retail Trust (LMIRT) reported its 3Q14 results which fell short of ours and the street’s expectations. Gross revenue dipped 14.6% YoY to S$33.3m due to the depreciating IDR and lower rental guarantee income and other income. In IDR terms, gross rent rose 1.6% YoY to IDR266.1m, driven by positive average rental reversion of 11.6%, but total gross revenue and NPI declined 4.4% and 6.4% to IDR305.2m and IDR290.3m, respectively. DPU for 3Q14 came in 20.7% lower YoY at 0.63 S cents.

For 9M14, gross revenue slipped 14.9% to S$101.0m, or 68.3% of our FY14 forecast; while DPU declined 23.8% to 2.05 S cents, forming 68.8% and 70.7% of ours and Bloomberg consensus’ full-year projections, respectively. Looking ahead, LMIRT believes the outlook for quality spaces is promising over the next 12 months as both local and foreign retail players continue to be active. We maintain our HOLD rating on LMIRT, but will review our S$0.37 fair value estimate.

Source: OCBC Research - 13 Nov 2014