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Bright outlook for IOI Prop: Research firm

Posted on: 28 May, 2019

PETALING JAYA: The outlook for IOI Properties Group Bhd is believed to be positive anchored by a strong contribution from its property development projects, particularly in China and Singapore, according to AmInvestment Bank.

In its report today, the research house said that stable income from property investments and the growing leisure and hospitality business would also drive the group’s performance moving forward.

It noted that IOI Properties’ core net profit of RM544.1 million (48.1% growth year-on-year) for the nine months of FY19 came in above expectations at 80% and 79% of its and consensus full-year estimates respectively.

The stronger earnings were mainly contributed by property development in China and higher share of profit in joint ventures mainly arising from the sale of South Beach Residences in Singapore.

The group is planning to launch 1 billion renminbi worth of projects in 4Q FY19 with the main focus in Xiamen, China. The previous launch of properties in Xiamen back in September 2018 has seen positive results as the properties were almost fully taken up within a day.

“We revise our FY19–21 forecasts upwards by 3.5%, 3.3% and 3.2% respectively to reflect the timing of revenue recognition, mainly driven by property development projects in China and Singapore,“ said AmInvestment Bank.

Meanwhile, it said that the upcoming investment properties in IOI Palm City, Xiamen, comprising 2.37 million net lettable area of retail and office are progressing well and are scheduled to be completed in stages from 2020.

Also, the 1.5 million sq ft of retail and office area at Central Boulevard, Singapore scheduled for completion in 2022, will provide additional revenue for the investment properties division moving forward.

AmInvestment Bank maintained its “buy” recommendation on IOI Properties with a slightly higher fair value of RM1.89 from RM1.88 previously.

Meanwhile, Kenanga Research reiterated its “outperform” call on the stock with an unchanged target price of RM1.65.

“IOI Properties is our 2Q19 preferred pick being the most bashed-down big player despite its relatively brighter outlook compared to peers given its comparatively lesser dependence on local sales. This is because its main earnings driver is its Xiamen, China projects, which have delivered strong uptakes,“ it said.

 
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