IOIPG’s property demand in China remains healthy, analysts confident on group’s outlook

KUALA LUMPUR: Analysts are confident on IOI Properties Group Bhd’s (IOIPG) outlook given the strong response in its products and potential land banking activities in China coupled ongoing efforts to increase its recurring income base.

In a report, the research team at Hong Leong Investment Bank Bhd (HLIB Research) said: “We remain confident on the Group’s outlook given the strong response in its products and potential land banking activities in China coupled ongoing efforts to increase its recurring income base.

“We also see value in the stock given its ability to heavily outperform its peers over the past two quarters during the ongoing pandemic alongside its ability to sustain strong net margins of 20 to 30 per cent.”

It noted that demand for IOIPG’s properties in China remain healthy (supported by a pent-up demand) and it does not foresee difficulties in the remaining launches worth of three billion renminbi over the next two to three years.

“Notably, its recent launch of villas in Xiamen achieved a take-up rate of over 40 per cent within weeks. IOIPG remains open to land-banking opportunities in China whereby its efforts can be seen in its recent discussions to enter a preliminary MOU with the Qianhai Administration Bureau as an expression of interest to potential land-banking activities in Qianhai,” it added.

“We believe IOIPG will continue to do well in China given its successful track record in developing IOI Park Bay and IOI Palm City (Jimei), and IOI Palm International Parkhouse (Xiang An), all located in Xiamen,” HLIB Research opined.

It further pointed out that IOIPG reported 1QFY21 core PATMI of RM175.2 million (down 0.4 per cent quarter-onquarter, down 0.2 per cent year-on-year) which were above expectations largely due to higher-than-expected sales recognition from China and completed inventory sales.