KUALA LUMPUR: Kenanga Research said IOI Properties Group Bhd
's 1H18 core net profit of RM354mil missed expectations due to weaker-than-expected local billings.
Core net profit came to RM354mil, which was 39% and 38% of street's and its FY18E estimates respectively.
The research firm downgraded the counter to market perform with an unchanged target price of RM2 based on 62% discount to its FD RNAV of RM5.31.
According to Kenanga Research, the lower core net profit in the first half was due to slower billings, particularly from its local projects.
"Sales for the period were at RM1.1b (Malaysia-59%, Singapore-32%, China-9%) or 38% of our FY18E target of RM2.90b (management does not provide official targets)," it said in its Monday research note.
FOr 2Q18, core net profit fell 12% on quarter mainly due to a 23% drop in develoment revenue on weaker billings as its other segments registered 6-9% top-line growth.
The research firm said over FY18, the overseas drivers are Trilinq Singapore and Xiamen 2 GDV remaining of which the group intends to launch RM600mil by 4Q18.
"Locally, the emphasis will remain on affordable housing, i.e. Bandar PuteriBangi, Bandar WarisanPuteri, Bandar Puteri Puchong (Le Pavilion), 16 Sierra, IOI Resort City (Connezion, Par 3).
"Also pending is the MoA between IOIPG and Hong Kong Land International Holdings Ltd (HKLI) to jointly develop the Central Boulevard, Singapore land on a 67%:33% basis."
Kenanga Research said it is lowering FY18-19E core net profit by 8-5% as its reduces FY18-19E sales targets by 10-7% to RM2.61-2.70bil.
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