IOI PG debuts on Bursa with 70 sen premium

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KUALA LUMPUR: IOI Properties Group Bhd (IOI PG) made its debut on the main market of Bursa Malaysia yesterday, with the opening price at RM3.21 a share, a 70 sen premium from its reference price of RM2.51, with 671.5 million shares transacted.

The company’s listing on Bursa Malaysia is the first this year.

The listing has made IOI PG one of the largest property companies in the country, with a market capitalisation of RM8.13 billion.

Among the company’s key investments are in property development, property investment, hospitality and leisure industries.

Speaking to reporters at the listing, IOI Group founder Tan Sri Lee Shin Cheng said he would be focusing more on the company’s sustainability and growth.

“The biggest market capitalisation is not important, the company’s growth and sustainability is more important,” he said.

He said the company was looking at more long-term property investments and also eyeing the overseas market to transform it into a multinational property entity.

The listing enables IOI Properties to capitalise on its strong business fundamentals and maximise on its potential value – the large 10,000 acres of its strategic land bank, while its former parent company, IOI Corporation Bhd, now a demerged entity, would regain its status as a full-fledged plantation player.

Lee said among the company’s mega projects are IOI Resort City in Putrajaya, South Beach Development in Singapore and IOI Palm City in Xiamen, China.

The projects are expected to yield an estimated gross development value of RM10.7 billion, upon completion, he said.

For Malaysia, the IOI Resort city has the largest potential though it was still under construction and slated for completion by end-2014, but already tenanted by about 80 per cent, Lee added.

Meanwhile, Hong Leong Investment Bank Research has given a “buy” rating for IOI Properties, with a target price of RM4.01.

“The company is one of the largest and the most established property developers, with an excellent track record since the 1980s.

“It has more upside to come as the listing does not come at the peak of the property cycle for the China and Singapore markets,” the research house said in its initial public offering note.

IOI PG has a strong track record, with sales totalling RM1.7 billion in the 2013 Finacial year with superior margins, the research firm said.

In the 2011 to 2013 financial years, the gross margins ranged from 57 per cent to 61 per cent due to the appreciation in value of its well located landbanks.

It also said the company has strong earning growth of 17 per cent to 21 per cent from this year to the 2016 Financial Year.

This is on the back of its RM13.9 billion gross development value worth of projects to be launched over the next three years in Malaysia, Singapore and China, with unbilled sales of RM1.2 billion, Hong Leong Investment Bank Research said.

The investment bank also estimated that the pre-tax profit for the IOI Properties in the 2014 Financial Year ending June 30 will be RM1.124 billion in comparison with the FY2013 projection of RM904.8 million. — Bernama