The unfolding COVID-19 has claimed the first S-Reit casualty in Eagle Hospitality Trust. Which will be the next one? In view of the plunging Lippo Malls share price over the course of last month, investors must be living in fear. Looking back, Lippo Malls share price was actually cruising along finely in 2019 with the strengthening of Indonesian rupiah until COVID-19 came along to mess things up.
Year-to-date, Lippo Malls share price plummeted by a whopping 52%, making it one of the worst SGX stocks to own. Apart from COVID-19, what could be the other dark forces behind the meltdown of Lippo Malls share price? In my view, besides macro factors, it is also important to pay attention to the business fundamentals because that will shape Lippo Malls share price even in the midst of market chaos.
With effect from 1 April 2020, all of LMIR Trust’s portfolio of 23 retail malls and seven retail spaces will be temporarily closed except for essential services. The period of closure will be for a minimum of two weeks till 14 April 2020. At this point of writing, it is difficult to assess the full financial impact of the crisis on Lippo Malls financial performance but interestingly, the biggest correction of Lippo Malls share price occurred after SGX queries issued on 2 March 2020.
The SGX queries centred on three questions relating to the full-year financial statement released on 19 February 2020. By and large, it was a good financial result but credit to SGX, the regulator asked some very good questions. Most retail investors may not be sharp enough to pick up these findings. Nonetheless, investors viewed the SGX queries in negative light and fled for their lives, causing Lippo Malls to roll off the cliff.
At $0.10, Lippo Malls is indeed trading at very attractive level as Price/Book Value reached a mere 0.29. But will this counter withstand the tsunami impact of the devastating COVID-19? In this article, I will share my thoughts on the prospect of Lippo Malls share price, along with my analysis of SGX queries.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Lippo Malls before. Whether Lippo Malls share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
Lippo Malls a value trap or value buy?
Investing in this counter is no fun as Lippo Malls share price has never reached the giddy height of IPO price. For those who bought at IPO and hold the units till now, the massive decline in unit price would have wiped out the returns from the total DPUs collected. At current price of $0.10, Lippo Malls had also breached the previous low of $0.15 seen in the Great Financial Crisis of 2009.
Back in 2009, the recovery of Lippo Malls share price had been swift post-crisis. But this time round, the situation is not so straightforward. A lot actually depends on the [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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