Sunday, 24 April 2016

A Peon Analysis - Lippo Malls Indonesia Retail Trust (LMIR)

Hihi! 😊

I am starting this blog series to document my analysis of anything (equities, bonds, commodities) that can make me more moolah!

Age is catching up on me and I'm getting desperate to be financially free!

Anyway, I thought of starting this series because ideas are constantly popping up in my mind on how to maximise my returns and yet I hardly pursue these ideas ultimately. Perhaps this series will encourage me to give more thoughts to my abstract ideas and increase my passive earnings!

Hokay. Enough of me yakking away. Let's have a look at this thought bubble which have been in my mind recently...

"Should I divest my LMIR holdings?"

To offer a brief summary, I actually got into LMIR during Year 2012 at a rather high price of $0.4075.

Fast forward 4 years later and we have seen its price dropped to $0.33 recently, representing a loss of 19.02%!

So now the questions to ask will be whether the drop is merely temporary due to factors not within the control of the company? Or is the drop due to deep seated structural issues with the company?

If it is the latter, I would want to divest immediately so as to cut my loss. 

However, if the drop is merely due to external factors that will vanish in time to come (currency fluctuation, cyclical nature of industry, etc), then I'll want to hold on to LMIR for a little longer.

As always, I'll start off with my analysis using my standard template:

Oooh.. looks like LMIR performance has actually improved compared to my previous assessment of it (click HERE to read my previous assessment)!

With all things being equal to my previous assessment, Distribution Per Unit (DPU) has actually increased from Year 2014.

Based on my standard template for analysing equities, LMIR has achieved an overall score of 63 out of 100, which is higher than my sell signal of 50 points and below. Hence, there is no compelling reason for me to sell it right now.

However, a score of 63 is not very high either and I may consider divesting LMIR should any of the following events occur:

  • LMIR starts to acquire properties that are non-accretives, i.e.,acquiring properties that will actually reduce DPU to current stakeholders;

  • LMIR offers private placement at a discount to current market price, thereby diluting the equities of existing shareholders (I'll take up any rights offer though);

  • The incoming CEO replacing the incumbent CEO, Mr Alvin, does not provide a clear direction of how he/she is going to lead the company forward.

And this is it. I am done with my analysis and I hope I am right to hold onto LMIR.



Experiencing tranquility at Fo Guang Shan Temple, Kaohsiung, Taiwan.


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