Lippo Malls Indonesia Retail Trust

Lippo Malls Indonesia Retail Trust: OCBC note that the IDR has weakened some 7.4% against the SGD since 28 Jun, with SGD1 buying IDR8558.25 as at 21 Aug, compared to IDR7922.96 on 28 Jun (Bloomberg). House understand that only ~65% of the cash flow from the properties for 2H13 are likely hedged for depreciation of IDR against SGD. In addition, the weakening of the IDR against the SGD does not bode well for the valuation of LMIRT’s properties in SGD terms, which means that NAV would likely be affected negatively. To reflect a higher risk profile for LMRT, especially given the outflow of funds from emerging markets, house incorporate a higher cost of equity of 10.8%, versus 9.7% previously, and trim DDM-based FV to $0.44 from $0.49.