PETALING JAYA: IOI Properties Group Bhd
’s (IOIPG) current active land-monetisation exercise is seen as a positive catalyst for the group to unlock the value of its landbank and provide meaningful earnings visibility over the next one to two years.
Within six weeks, IOIPG has inked three land disposals with the latest being the disposal of a 3.7-acre freehold parcel in Jalan Ampang, Kuala Lumpur, to Paramount Corp Bhd for RM257.9mil.
Collectively, the three transactions unlocked approximately RM1.1bil in gross proceeds.
In a note to clients, TA Research said it viewed the Jalan Ampang landbank disposal as value-accretive, particularly given the land’s non-core status and lack of near-term development plans.
This was despite the achieved price of RM1,600 per sq ft is below historical benchmarks within the Embassy Row enclave, of about RM2,200 to RM3,300 per sq ft.
TA Research said, “We estimate the Jalan Ampang disposal to generate an attractive gross profit margin of around 60%, translating into net profit of RM117.6mil, with completion expected in mid-2026.
“This implies a potential 15.5% uplift to financial year 2026 (FY26) earnings.”
Meanwhile, the Banting and Senai landbank disposals are expected to deliver about 60% gross profit margins, which could lift TA Research’s FY27 earnings forecast of RM916.4mil by 41.9% to around RM1.3bil, the research house added.
On a pro forma basis, these transactions are expected to reduce the group’s net gearing to 85.5% from 89.9% as at the second quarter of financial year 2026 (2Q26).
However, TA Research has maintained its earnings forecasts at this stage, pending greater clarity on completion timing and profit recognition.
The research house, which maintained a “buy” call on the stock, has kept its target price unchanged at RM4 per share.
It noted that “we view the recent series of land disposals as a clear step-up in value crystallisation, reinforcing IOIPG’s ability to unlock value from its landbank with potential earnings uplift of 15% to 40%, which we believe is not fully reflected in current valuations, given the timing of profit recognition”.
Beyond earnings, the acceleration in disposals signals a more proactive capital recycling strategy, which should enhance capital efficiency and returns over time.
In addition, this is further complemented by the group’s planned Malaysian real estate investment trust (REIT) listing by end-2026, which could unlock the value of its recurring income assets and provide an additional re-rating catalyst, said TA Research.
MBSB Research in a report said, “We see the active land monetisation to lower net gearing of IOIPG which was at elevated level of 0.9 times as of 2Q26.
“The net gearing is expected to reduce to 0.85 times post the land disposals.
“Furthermore, the Jalan Ampang land is deemed a non-active landbank of IOIPG considering that the group is not actively developing high-end high-rise project in the Kuala Lumpur city centre.
“The land disposal is expected to contribute positively to earnings of IOIPG in FY26 as the disposal is expected to be completed within three months,” it added.
MBSB Research also estimates the land disposal to increase net profit for FY26 by about 17% based on gross profit assumption of 60%. Hence, it maintained its earnings forecast pending completion of the land disposal. MBSB Research has set a higher revised target price of RM3.35.
It also anticipates the listing of a REIT by IOIPG by 2026, which will unlock value of its investment properties to remain the near-term catalyst.
Meanwhile, a property analyst said at 0.85 times price-to-book, IOIPG continues to trade at a discount to peers with similar capital recycling and industrial monetisation exposure. However, he believes that this discount should narrow as execution visibility improves.
MBSB Research meanwhile said, “We think the valuation of IOIPG is stretched, trading at a price-to-book ratio of 0.76 times which is above its plus two standard deviation of nine-year means price-to-book ratio of 0.66 times.”
Hence, the research house maintained a “neutral” call on the stock.
