Sponsored REITs like Lippo-Mapletree Indonesia Retail Trust (LMIR)are generally perceived to have a lower risk profile. As of 3Q, LMIR has avery low leverage level of about 9% with no refinancing risk until 2013. Wethink the retail story in Indonesia is still compelling.
LMIR's portfolioof eight retail malls and seven retail strata spaces is strategicallylocated within well-established population catchments across Indonesia.LMIR's assets are due to be revalued in 4Q08.
The REIT's portfolio will berevalued in IDR ? this IDR value will then be converted back into SGD atspot rates. This creates a major revaluation risk ? even if the IDR valueof the portfolio stays the same. We have taken a fresh look at ourvaluation model, relaxing our fairly bleak expectations for the IDR-SGD.Our RNAV estimate for the REIT is S$0.55.
Our fair value estimate of S$0.39(prev. S$0.27) prices in a 30% discount to that estimate. Maintain BUY.
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