This will be a quick update on my latest addition to the portfolio as I tried to allocate some capital from the profits made on Spackman sold this week.
I added 80,000 shares of LMIRT at a price of $0.37. My rough calculation tells me that’s about 9% yield on the dividend.
People who know me knows that I used to work as an employee there so I’d probably not talk too much about the specifics operational performance of the company.
CEO Alvin has also since then left and is currently vacated temporarily by Albert Cheok.
The main reason I’m buying this right now is I am predicting a few phases of growth in the next couple of years, both in terms of micro and macro.
The tax amnesty reform is a super huge thing that happened across in 2016 for all Indonesians. These amount of money will be used for fiscal policies in improving the infrastructure of the country.
GDP growth seemed to bottom in 2016 and has seen a reversal in the last 3 quarters and expected to drive up further in 2017 and 2018.
The rupiah currency has also seen some strengthening as a result of this reform.
The government has introduced a string of reform policies in a bid to build up the economy back and they streamline and welcome foreign investment into the country.
Central bank has also eased rates and required reserves for helping the economy to pick up.
Operationally, rental reversions continued to be strong over the last 20 quarters and is expected to pick up even further in 2017 and 2018 as economy picks up.
The company has 23% of the lease that needs to be renewed in 2017, so I see this as a positive growth which will contribute to the bottomline.
The company has bonds and term loans that ranges from 3% to 5.18% with a weighted average expiry of 2 years. The company has recently acted by issuing a perpetual bond to refinance the existing term loan expiry albeit at a higher yield since this is classified under the equity portion of the balance sheet. Interest costs will reduce as a result but distribution will have to be considered for these perpetual security shareholders.
I am not expecting too much for this other than for the dividend yield and the natural growth from the organic portfolio.
This would fall under the 9 + 2% strategy, at least of what I see in 2017 and 2018.
I’ll review again every quarter of the performance and development.
Thanks for reading.