KUALA LUMPUR: Kenanga Research remains cautiously optimistic over IOI Properties Group Bhd's prospects following its earnings results that came within expectations.
In 1QFY21, core net profit of RM174.2mil came well within Kenanga's and consensus expectations at 25% and 30% of full-year estimates respectively.
Sales during the quarter of RM473mil was also within the research house's full-year sales target of RM1.9bil at 25%. The sales comprise of of 51% China sales and 49% Malaysia sales.
Moving forward, IOI's property investment will add on 3.4 million of 59% of net lettable area while its hospitality division will add on 865 or 46% keys. "While Covid-19 poses uncertainties for now, we feel the situation would eventually normalise and these assets would strengthen the group's recurring income base," said Kenanga.
The group's unbilled sales stood at RM563mil, which provides less than one year of visibility, it added.
Kenanga maintained its FY21-22 core net profit forecast at RM683mil -691mil with an unchanged sales target of RM1.9bil a year. It has a "market perform" recommendation on the stock with an unchanged target price of 97 sen.
"We remain conservative on our valuations for now and take cue from management given the fluidity of the situation, but take comfort in the group's well-located assets and geographical diversification injecting resilience to its earnings profile," it said.
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