Analysts still bullish on IOI Properties’ prospects

PETALING JAYA: Analysts continue to be bullish on IOI Properties Group Bhd’s prospects despite the sluggish property sector at home.

The stock, which continues to trade at a heavy discount to its net tangible assets (NTA) per share of RM3.40 is rated a buy at MIDF Research and RHB Research as the company had exposures to property developments overseas.

RHB Research noted that it is expecting the company’s earnings to pick up in the coming quarters as it rolls out more projects.

“We maintain our earnings forecasts for now. “Unbilled sales improved to Rm750mil, from Rm609.7mil as at the fourth quarter of the financial year 2019 (FY19 ended June 30),” RHB Research said in its report last week.

The research house expects an earnings boost to also come after the completion of Central Boulevard Towers in Singapore and IOI City Mall Phase 2 which is on track.

IOI Properties had reported an increase in its net profit in its latest reported first quarter for the period ended Sept 30 where bottomline jumped 22.04% to Rm136.64mil from Rm111.96mil a year ago.

An amount of circa Rm1bil worth of new projects is targeted to be rolled out in the financial year 2020.

RHB Research

Revenue however dropped slightly to Rm540.32mil in the latest reported quarter from Rm552.81mil a year ago.

According to RHB Research, IOI Properties’ management had said it expects this years’ sales to match last year’s of Rm1.93bil.

“An amount of circa Rm1bil worth of new projects is targeted to be rolled out in in the financial year 2020.

“The key launches planned are Gems @ IOI Resort City (gross development value of Rm612mil), and IOI Rio City @ Bandar Puteri Puchong (GDV: Rm652mil),” it said.

According to RHB, the company said it will also continue to focus on selling its unsold units.

“About 60% of the MYR2.0BN unsold inventory is located at the Klang Valley and Negeri Sembilan, while the balance of 40% is mainly at Johor,” it said.

IOI Properties’ new property sales reached Rm389mil compared to Rm548.7mil in the previous preceding fourth quarter.

Its projects in Malaysia contributed 56% of the sale, while China made up the remaining 44%. MIDF Research said IOI Properties’ valuation remains attractive and had retained its buy recommendation on the stock with a target price of RM1.53.

While RHB Research pegged a RM1.50 target price on the stock with a “buy” call.