In Part 1 of IGB REIT IPO Analysis, we summarized the quantitative aspects of the REIT – that is, the key financial figures from the prospectus.  In this second part, we extract the qualitative aspects of IGB REIT from its prospectus – both the good, and the bad, otherwise known as SWOT (Strength-Weakness-Opportunities-Threats) analysis.

 

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Strengths

Strategic location within a self-contained mixed-use development which comprises of hotels, offices and residential units. Crowd traffic to the malls is consistent.

High accessibility by Superior transportation infrastructure . In addition to public buses and taxi services, Mid Valley Megamall is directly connected to the Mid Valley KTM Komuter train station and is within close proximity to Abdullah Hukum KL LRT station. The Gardens Mall is in turn directly connected to Mid Valley Megamall via a roofed bridge and an underground tunnel. According to the Independent Market Research Consultant, there is a proposed linkage from Mid Valley City to the Abdullah Hukum KL LRT station via the upcoming KL Eco City.

Experienced Management team

Management team lead by Antony Patrick Barragry, Chief Executive Officer of the Manager.  His credentials:

He is a qualified architect with 35 years of international experience in the design, development and operations of major mixed-use developments. His prior work experience includes the Putra World Trade Centre and the Renaissance Kuala Lumpur Hotel, the Ciragan Palace Hotel in Istanbul, and Jebel Ali Hotel development in Dubai. He was previously Project Director in the construction of Mid Valley City Phase 1, including Mid Valley Megamall. Appointed as Executive Director of MVC in 2002, he spearheaded the development of more than six million sq ft of commercial space in Mid Valley City’s Phases 2, 3 and 4. He was also Project Director for the design and construction of the St Giles Hotel, Heathrow, London and the upgrading of IGB’s Pangkor Island Beach Resort, a 100-acre beach-front property on Pangkor Island. In January 2008, he was appointed Chief Executive Officer of MVCG. He holds a Diploma in Architecture from the University of Sheffield and is a member of the International Council of Shopping Centers and FIABCI.

Large and diverse catchment area

Mid Valley City are located in proximity to the upmarket Bangsar commercial and residential areas and the established Damansara Heights, Seputeh and Petaling Jaya residential areas, providing for an immediate catchment area which comprises some of the more affluent suburbs in the Klang Valley.

Both malls capture multiple target customer segments due to their size and diversified tenant mix

. • Mid Valley Megamall caters to families and tourists

• The Gardens Mall is positioned as a premium fashion mall focused on affluent, domestic, expatriate and international tourist customer segments.

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Weaknesses

Traffic congestion: Lingkaran Syed Putra is often congested during weekend/peak hours, which discourages traffic to the mall.

High dependency on vehicular traffic: Footfall is heavily correlated to the availability of car park bays – in which footfall growth may be limited in the future if the number of car park bays remains stagnant. Going forward, there does not seem to be any room for additional car park, therefore, any growth in the future can only come from alternative means of transportation such as the LRT and MRT.

Opportunities

Improving transportation infrastructure: The proposed linkage to the Abdullah Hukum Putra LRT Station, MRT 2 Circle Line and KL Monorail Extension will contribute to greater crowd traffic to the mall.

Population growth in the suburbs: Klang Valley is expected to house a population of 10 million by 2020, as such population growth in the suburbs will expand the catchment and bring more shoppers to Mid Valley Megamall.

Increasing commercialization of the immediate surroundings. Ongoing developments such as Bangsar South, KL Eco City and KL Sentral to bring more commercial content and business can be created into the area.

Threats

Upcoming malls: Several malls exceeding 1.0 million sq ft in size are in the works, including Boustead Retail at Jalan Cochrane, Empire City Mall in Damansara Perdana, IOI City Mall in Putrajaya and i-City Mall in Shah Alam which may potentially dilute the market share of Mid Valley Megamall.

Urban sprawl: Escalating property prices has resulted in the expansion of geographical boundaries to the south and west of Klang Valley for residential developments. This may lessen the concentration of catchment population of the malls.

On top of that, here is a summary of what we have discussed on Part 1 of IGB REIT IPO Analysis.

Note: All information are quoted from the first draft of the IGB REIT Prospectus. This is not an invitation to buy or sell. The content on this site is provided as general information only and should not be taken as investment advice. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.**********LCF of HowToFinanceMoney.com, also co-founded REITMethod.com with KC Lau, the first REIT investment online educational course for Malaysians.


CF Lieu
CF Lieu

CF Lieu (CFP) is an independent financial adviser and maintains an active vlog at http://www.howtofinancemoney.com/

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