PETALING JAYA: Despite its results coming in below expectations for 2018, property developer I-Bhd
’s longer-term earnings trend is seen to remain intact.
According to Public Investment Bank, the property developer’s longer-term prospects would be underpinned by the remaining 50% of the gross development value (GDV) of its project in Shah Alam, Selangor, that had yet to be realised.
The brokerage maintained its “outperform” call on I-Bhd. It, however, cut the company’s share target price to 75 sen from 91 sen previously in tandem with lower earnings projections for the financial years (FY) ending Dec 31, 2019, and 2020.
“We continue to like I-Bhd’s value proposition and attractive location in benefiting from the urbanisation of the outer Klang Valley region (Klang and Shah Alam),” it added.
I-Bhd posted a lower net profit of RM58.8mil, or 5.54 sen per share, for FY18, compared with RM63.2mil, or 5.95 sen per share, in the preceding year.
The group’s revenue was lower at RM375.1mil for FY18, compared with RM455.2mil in the preceding year.
Commenting on I-Bhd’s results, Public Investment Bank noted the weakness was due to lower-than-expected sales at its 8 Kia Peng project in Kuala Lumpur amid the increasingly challenging operating environment.
The brokerage noted in the final quarter of 2018, property development contributions to I-Bhd’s earnings disappointed, with only RM2.3mil in pretax profit recorded, while the leisure business took up the slack with RM7.5mil in pretax profit contributions.
In addition, losses in the property investment segment also widened to RM3.3mil largely due to pre-operating expenses at its associate, though this would see a turnaround in fortunes soon with the imminent opening of the mall, which would also bring its own 150,000 square feet retail space into play.
Unbilled sales were RM149mil as at end-December 2018, down slightly from RM161mil as at end-September 2018.
Meanwhile, I-Bhd is expected to launch two projects in the second half of 2019, with a combined GDV of about RM600mil.
At the end of this month, the group is expected to open its one million square feet Central i-City mall, with tenancy rentals at about 80%, according to Public Investment Bank.
“With only half of i-Bhd’s RM9bil GDV tapped, further opportunities abound,” the brokerage said.
It noted that with I-Bhd’s redeemable convertible unsecured loan stock (RCUL) coming due in August this year, and it being significantly out-of-money, it is not likely to be converted, potentially leaving I-Bhd in a slight spot of bother, considering its current cash pile of only RM18.8mil against a redemption requirement of RM201mil.
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