HLIB Research said the improvement in IOIProp’s hospitality division is expected to happen in the second half of this year.
KUALA LUMPUR: IOI Properties Group Bhd
(IOIProp) may see a rebound in its hospitality segment following the completion of the refurbishment of its Palm Garden and Putrajaya Marriott Hotel.
Contributions from the recently acquired W Hotel and Courtyard may also help boost this segment of the group.
According to Hong Leong Investment Bank Research (HLIB Research), the improvement in IOIProp’s hospitality division is expected to happen in the second half of this year.
Record-high room rates surpassing pre-pandemic levels in central KL and Penang will benefit W Hotel and Courtyard, it said.
It also noted IOI City Mall’s rising tourist footfall. especially from China. bodes well for its hotel assets in the IOI Resort City locality.
“Evidently, Le Meridien Hotel near IOI City Mall currently has a high occupancy rate of 94%.
“Increasing unbilled sales from reacceleration in domestic launches will positively contribute to the property development segment ahead,” HLIB Research said.
Its exposure in the Singapore property market may also see potential gains in the near to medium term.
This is driven by the upcoming IOI Central Boulevard office building and the launch of the Marina View Residences, HLIB Research said.
“These developments are expected to boost the group’s earnings significantly from financial year 2025 (FY25) onwards,” it said.
The research house maintained its “buy” call on IOIProp with an unchanged target price (TP) of RM2.95 a share based on a 50% discount to its revised estimated revised net assets value of RM5.91 a share.
There is a substantial revaluation gain of RM3bil-RM7bil or earnings per share of 54 sen to RM1.27 a share upon IOI Central Boulevard’s completion, which represents a 24%-56% upside of its current share price.
Meanwhile, RHB Research said IOIProp’s second-quarter results had missed expectations from the weaker China property sales.
But despite the weaker earnings, there was a catalyst from a potential real estate investment trust (REIT) listing of some of IOIProp’s property assets which could drive investor interest in the stock, it noted.
RHB Research has maintained its “buy” call on the counter, with a new TP of RM2.75 a share from RM2.50.
“Our higher TP reflects the new gross development value of Marina View as the project will be rolled out as a branded residential project at a later date,” it said.
TA Research revised its sales assumption for IOIProp’s FY24 from RM3.4bil to RM2.06bil in light of the official launch of Marina View being delayed until FY25.
It maintained its “buy” call on the counter with a new higher TP of RM2.79 per share on a higher price-to-book ratio of 0.65 times from 0.5 times before.
