IOI Properties' 1Q results within expectations, say analysts

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KUALA LUMPUR (Nov 21): IOI Properties Group Bhd's earnings for the first quarter ended Sept 30, 2017 (1QFY18) came in within expectations, says analysts. 

In a note today, HLIB Research analyst Lee Meng Horng said the results were deemed in line, as the first quarter results usually makes up about 20% of IOI Properties' full year figures.

"1QFY18 core profit rose by 7.9%, driven by higher operating margin for all segments. The lower revenue from property development was partially offset by better performance from property investment and leisure & hospitality divisions," Lee said.

RHB Research Institute analyst Loong Kok Wen also concurred with the same sentiment. 

"Earnings from its property development segment fell sequentially, mainly due to the strong sales in Trilinq Singapore last year. Meanwhile, the EBIT for its property investment division also recovered, given the absence of a write-off that was incurred in the previous quarter," she wrote. 

Loong noted IOI Properties registered new properties sale of RM677 million during the quarter, with sales from Malaysia contributing 54%, while Singapore and China contributed 34% and 12% respectively. 

"The contribution from the Trilinq project is expected to decrease this year, as the project is only 10.8% unsold (out of 755 units). Local sales were mainly contributed by Conezion in Putrajaya, Sky Condominium in Bandar Puchong Jaya, Le Pavilion in Bandar Puteri Puchong and Almyra Residence in Bandar Puteri Bangi," she added.

Both analysts agree IOI Properties is set to meet its FY18 sales target of RM2.5 billion, with projects planned to roll out during the financial year, including Cruise Residences in Bandar Puteri Puchong, townhouses in Bandar Puteri Bangi, and Warisan Puteri in Sepang. 

"On the international front, Renminbi 2 billion worth of GDV (gross development value) from the remaining GDV of Renminbi 4.6 billion in Xiamen 2 is expected to be launched in FY18, and come in timely towards the end of FY18 to fill up the gap left by Trilinq," HLIB's Lee added. 

Both HLIB and RHB maintained their 'Buy' call on IOI Properties, with target prices of RM2.54 and RM2.50 respectively. 

At 11.33am, IOI Properties shed 0.50% or 1 sen to RM1.98, with 400,900 shares traded.