I-Bhd plans RM3bil worth of projects

Big plans: Lim says the group will be launching between RM200mil and RM300mil worth of projects a year.

PETALING JAYA: Property developer I-Bhd, which is embarking on a new five-year growth strategy effective next year, plans to launch up to RM3bil worth of projects over that period.

Executive chairman Tan Sri Lim Kim Hong said the group will be launching between RM200mil and RM300mil worth of projects a year.

The company, best known for its 72-acre i-City development in Shah Alam, still has a lot of projects to develop at the site, he said.

“We still have RM6.5bil of gross development value (GDV) to be developed at i-City. That gives us about 13 years of launches still to go,” he told StarBiz.

Under the company’s initial five-year growth plan, which ends this year, the aim was to grow contributions from its property development division.

“Back then, the group turnover was only RM66.7mil with property development contributing about 37% of the turnover. In 2017, this segment accounted for 90% of turnover. We expect this profile to be maintained over the next five years.

Starting from next year, I-Bhd is looking at achieving returns on equity of 10% annually. We are also looking at steady earnings contributions from our property development division,” he said.

The group’s five-year growth strategy will involve ramping up its leisure division, said Lim.

“For the leisure side, two hotels would be ready. We will start construction of the third hotel after Double Tree Hotel opens (in 2020). In terms of revenue, it won’t affect the five-year plan.

“Apart from the hotels, the leisure segment will also see contributions from our theme park and convention centres,” he said.

On track to be completed this year will be I-Bhd’s Central i-City Shopping Centre.

The 1.5 million sq ft Central i-City Shopping Centre project is a joint venture between Bangkok-based Central Pattana Public Co Ltd and I-Bhd, with the former holding a 60% stake in the partnership.

With a GDV of RM850mil, the project is the first international mall development for Central Pattana, which is the largest mall owner and developer in Thailand.

Once the mall is open, Lim said I-Bhd plans to launch more retail spaces within i-City.

Lim is optimistic about the outlook of the local property market going into the next five years.

“In terms of challenges, it would be the economic environment. We have no funding issues; and in terms of the business segment, we’re not establishing a new segment that we’ve not done for the past few years. So we’re familiar with what we’re doing.”

I-Bhd registered a 16.6% net profit growth to RM24.49mil for the first quarter ended March 31, 2018, compared with the corresponding quarter last year.

It recorded a revenue of RM159.3mil which was 47% higher compared with the corresponding period last year.

In terms of segment performance, property development remained the largest revenue contributor for the quarter with RM147.9mil recorded, making up 93% of the group’s revenue, while the leisure segment came in at 6% of total group revenue or RM9.7mil.

The group’s unbilled sales as at March 31 stood at RM272.8mil and is expected to grow in tandem with the sales of the 8 Kia Peng @KLCC project, which is expected to contribute positively in a year or two.

In a recent research note, RHB Research acknowledged that I-Bhd was off to a good start for the year following its first quarter financial performance; while PublicInvest Research (PIVB) retained its “outperform” call for the stock.

Said RHB Research: “We raise our 2018 to 2020 earnings revision by 14%, 3%, and 2% respectively due to MFRS15 adoption and higher earnings from 8 Kia Peng.”

The research house added that 2019 to 2020 earnings could be flat from lower property sales this year and flat unbilled sales.

MFRS15, an accounting rule, is effective for financial periods beginning on or after Jan 1, 2018, with early application permitted.

Meanwhile, PIVB said I-Bhd’s earnings growth is intact and has been on a consistent and upward trajectory, adding that the company’s strong fundamentals is still largely ignored by the investment fraternity – presumably on its single-location focus.

“We continue to like I-Bhd’s value proposition and attractive location in benefitting from the urbanisation of the outer Klang Valley region (Klang and Shah Alam).”