PETALING JAYA: IOI Properties Group Bhd
is expected to see better sales prospects in its current financial year ending June 30, 2024 (FY24), driven by launches from local and Singapore projects.
MIDF Research in a report said the bulk of its sales will be driven mainly by launches of properties in Malaysia.
“Meanwhile, the launch of Marina View in Singapore with a gross development value of S$2.6bil (RM8.9bil) is expected to boost new sales of IOI Properties in FY24 in view of the improving property market in Singapore.
“Additionally, sales of completed inventories in China will further propel new sales growth in FY24.”
The research house noted that IOI Properties recorded new sales of RM1.37bil in the first nine months of FY23, making it on track to match sales of RM1.9bil in FY22.
“In a nutshell, we expect new property sales to be higher (than RM2bil) in FY24.”
Separately, MIDF Research said it expects IOI Properties’ property investment division to continue staging a recovery in FY24.
“The growth of the division should mainly be underpinned by the higher rental income from IOI City Mall in Putrajaya, following the opening of phase 2 of IOI City Mall.
“Note that IOI City Mall has strong shopper footfall and we expect rental reversion for the mall to be in positive territory.
“Additionally, the contribution from IOI Xiamen Mall should also support earnings growth of its property investment division.”
MIDF Research said the size of IOI Properties’ investment properties has been growing in the past few years with the completion of IOI City Mall, IOI City Mall Phase 2 and IOI Mall in Xiamen.
“Note that IOI Properties has eight retail assets with market value of RM4.6bil and four office towers with market value of RM1.2bil.”
Additionally, the research house said IOI Properties has two offices under construction, which are IOI Central Boulevard in Singapore and IOI Palm City in Xiamen, China, which collectively have an indicative market value of RM13.6bil.
“That gives the total market value of investment properties of over RM19bil.”
MIDF Research noted that IOI Properties is looking to list its investment properties under a real estate investment trust (REIT) in the long term to unlock the value of its investment properties.
“If that materialises, the REIT will be the largest REIT in Malaysia in terms of asset size.
“Nevertheless, we reckon that the listing of the REIT may not be in the short-term, as IOI Properties could fetch better yields for IOI Central Boulevard in Singapore after one round of a three-year tenancy cycle.”
MIDF Research is maintaining a “buy” call on the stock with a revised target price of RM1.38 (from RM1.29).
“We remain positive on IOI Properties as we see stable long-term prospects due to the stable outlook for the property development and property investment divisions.
“Additionally, the potential listing of its property investment division in the medium-to-long term could unlock value of the division.”
