KUALA LUMPUR: Affin Hwang Capital Research has reiterated its “buy” call on IOI Properties Group Bhd with a higher target price of RM3, based on a 40% discount to revalued net asset value (RNAV).
The research house also recommended shareholders to subscribe for the 1-for-4 rights issue at the price of RM1.38 given the attractive 35% discount to the current share price (ex-date on Feb 28).
“IOI Properties posted a 10% year-on-year increase in net profit to RM463mil in 1HFY17, which was above market and our expectations,” Affin said.
IOI Properties’ net profit of RM463mil in 1HFY17 comprises 58% of the consensus and Affin’s previous FY17 forecasts of RM794 to RM795mil.
It added that both the property development and investment segments saw a better performance.
IOI Properties achieved higher sales of RM795mil in 2QFY17 compared to RM730mil in 1QFY17.
“Sales are expected to remain strong in 2HFY17 as IOI Properties will launch the last phase of its Trilinq condominium project in Singapore.
“Unbilled sales of RM1.62bil as at end-2016 should sustain revenue going forward,” Affin said.
“We raise our EPS forecasts by 32-34% for FY17-19E to reflect higher sales and progress billings,” it added.
Affin has raised its RNAV/share estimate of IOI Properties to RM5 from RM4.81 previously assuming a higher revaluation surplus for its land bank.
“Based on the same 40% discount to RNAV, we raise our 12-month target price to RM3.00 from RM2.89. Maintain buy,” it said.
It noted that the risks to its call would be higher financing costs for its new land bank acquisition in Singapore and a prolonged downturn in the domestic property market.
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