PETALING JAYA: IOI Properties Group Bhd
(IOIPG) may continue to see a relatively slower property development turnaround, as opposed to other developers, and significantly higher gearing of 0.95 times versus its peers’ average of about 0.4 times.
Kenanga Research said investors may be more supportive of the group, thanks to its focus on boosting its property investment divisions and propping up its looming real estate investment trust (REIT) listing, which is scheduled for the second half of financial year 2026.
That said, Kenanga Research is mindful that the group may see earnings headwinds should interest costs rise from the normalisation of Singapore overnight rate average, whereby 84% of its borrowings are Singapore-based.
Pending finalisation by the group, its estimate is for RM8bil of such REIT-able assets to trade at one time price-to-book value in line with the average of big-cap Malaysian REITs without discount.
Assuming a 55% discount is applied, its blended discount is about 45%, translating into a market valuation of RM15.5bil. This explains the 51 sen rise in its target price to RM2.81 a share from RM2.30 a share.
Kenanga Research retains its “market perform” on the stock.
It likes the group for its focus on high-value products in matured townships with its well-diversified products and its expanding investment property portfolio with steady recurring incomes that bode well with its upcoming REIT listing.
It also likes the group for its presence in the vibrant property sector in prime locations in Singapore.
The risks cited to its call include lower-than-expected valuations for the REIT listing and softer-than-expected performance from new launches.
The group hosted a site visit at its Singapore developments, showcasing IOI Central Boulevard Towers, JW Marriott Hotel and the office tower at South Beach Avenue, as well as the recently launched W Residences Marina View.
