AmInvest Research upbeat on outlook of IOI Properties

mInvestment Research is upbeat on the outlook of IOI Properties Group, anchored by a strong contribution from its property development projects, particularly in China and Singapore, stable income from property investments and its growing leisure and hospitality business.

KUALA LUMPUR: AmInvestment Research is upbeat on the outlook of  IOI Properties Group, anchored by a strong contribution from its property development projects, particularly in China and Singapore, stable income from property investments and its growing leisure and hospitality business.

The research house maintained its buy recommendation on IOI Properties with a slightly higher fair value of RM1.89 (from RM1.88) based on sum-of-parts valuations. It closed at RM1.20 on Monday.

“We raise our FY19 to FY21 forecasts by 3.5%, 3.3% and 3.2% respectively to reflect the timing of revenue recognition,” it said.

IOI Properties' 9MFY19 core net profit of RM544.1mil (+48.1% YoY) came in above expectations at 80% and 79% of AmInvest Research and consensus full-year estimates respectively. 

The stronger earnings were mainly contributed by: (i) property development in China; and (ii) higher share of profit in Jvs mainly arising from the sale of South Beach Residences in Singapore.

“The property development segment recorded a 9MFY19 EBIT of RM507.1mil (+14.3% YoY) as a result of higher profit contribution from its development projects in China. The property investment segment remained stable, with a 9MFY19 EBIT growth of 2.3% to RM209.5mil,” it said.

AmInvest Research pointed out IOI Properties was planning to launch one billion renminbi worth of projects in 4QFY19 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.

The upcoming investment properties in IOI Palm City, Xiamen, comprising 2.37mil NLA of retail and office are progressing well and are scheduled to be completed in stages from 2020. 

Also, the 1.5mil 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.