Kenanga maintains market perform on IOIProp

KUALA LUMPUR: Keangna Research has reduced its FY19E-19E estimate on IOI Properties Group Bhd's core net profit by 15-16% on weaker sales targets.

It said IOI Properties' 9M18 CNP of RM573mil missed expectations due to weak property billings on the back of lower local launches and fewer inventory sales.

"Additionally, we were also anticipating Xiamen 2, China launch in 4Q18 (RM0.6b GDV out of c.RM5b) which would have resulted in strong billings as launches can only take place after the construction progress reached 50% completion; but based on management’s guidance, they are only likely to launch GDV of RM0.2b by 4Q18."

The research house said local launches have been slower as the group has only launched RM1bil year-to-date due to uncertainties leading up to GE14.

In 2018, the group will launch Xiamen 2 and another RM200mil GDV remaining for Trillinq, Singapore, to be sold as well. 

"We gather that soft launch of its Sentosa Cove projects, namely Cap Royale and Seascape, which have a combined GDV of RM6.6b, will be taking place soon.

"These JCE projects are completed ones, meaning billings of sales will be like Trilinq."

Kenanga added that the sPA sales from the Sentosa Cover project risk spilling over into FY19 and may take longer to clear compared to TRilinq as they are luxurious projects.

The research house maintained market perform on the counter with an unchanged target price of RM1.70.