IGB 4Q net profit declines amid lower contribution from property investments

IGB 4Q net profit declines amid lower contribution from property investments
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KUALA LUMPUR (Feb 19): IGB Bhd posted a nearly 35% drop in net profit for the fourth quarter ended Dec 31, 2019 amid lower contribution from its commercial and retail property investments.

In a bourse filing, the group said its fourth quarter profit fell to RM59.9 million, from RM92.01 million in 4QFY18, which translates into lower earnings per share (EPS) of 8.8 sen in 4QFY19 from 13.76 sen a year prior.  

Quarterly revenue grew by 18.39% to RM427.49 million from RM361.1 million before, which the group attributed to its commercial and retail property investment division. Higher rental revenue was derived from its Menara Southpoint building in Mid Valley City, as well as from The Mall, Mid Valley Southkey, which opened for business on April 23, 2019.

But its bottom line was hit by higher depreciation and finance costs charged to the income statements of its units, Mid Valley City Southpoint Sdn Bhd and Southkey Megamall Sdn Bhd.

IGB’s full-year net profit was lower by 11.45% to RM208.67 million from RM235.64 million in FY18, which translates into FY19 EPS of 30.66 sen against 35.24 sen a year ago.

FY19 revenue was 10.8% higher at RM1.44 billion from RM1.3 billion in FY18.

The group has proposed an interim dividend of 4.3% per annum, based on the issue price of RM3.28 per Redeemable Convertible Cumulative Preference Share (RCCPS) which was issued on Feb 15, 2015, and matured on Feb 14, 2020.  The dividend will be paid on March 27, 2020.

Previously, IGB had declared an interim dividend of three sen for FY19. Of this, one sen was paid in cash with the balance paid by the way of dividend-in-specie by distributing treasury shares.

“The cash dividend was paid on Oct 4, 2019 and the treasury shares were credited to the entitled members’ account on Oct 4, 2019,” the company said.

On its prospects, the group noted that the property investment segments will be more challenging in the near term given the increase in retail space supply and slower demand for office space in Kuala Lumpur.

“However, with the prime location of the Group’s retail malls and office buildings, the Board expects contribution from this segment to be satisfactory. Menara Southpoint at Mid Valley City with net lettable area of about 490,000 sq ft was completed and obtained its Certificate of Occupation on July 6, 2018 and is expected to contribute positively to the growth of this division.

The Mall, Mid Valley Southkey, located in Johor Bahru had its soft opening on April 23, 2019 and is expected to contribute to the growth of the Group’s retail division. 90% of The Mall’s lettable area has been committed with tenants and currently about 87% of them are opened for business,” the group said.

Shares in IGB closed unchanged at RM3.32, which translates into a market capitalisation of RM2.29 billion.