KUCHING: Overseas projects will remain a key driver for IOI Properties Group Bhd’s (IOI) sales in its financial year 2018 (FY18).
While management has not provided official sales targets for FY18, Kenanga Investment Bank Bhd (Kenanga Research) expect oversea markets to be the main drivers such as Trilinq Singapore with about RM0.7 billion in gross development value (GDV)remaining and Xiamen 2 with circa RM5 billion GDV remaining.
“Locally, the emphasis will remain on affordable housing – Bandar PuteriBangi, Bandar WarisanPuteri, its stronghold in Bandar PuteriPuchong, 16 Sierra, IOI Resort Fity (Connezion, Par 3),” it added.
“Additionally, pending is a MoA between IOIPG and Hong Kong Land International Holdings Ltd to jointly develop the Central Boulevard, Singapore land on a 67:33 per cent basis, respectively.
We have yet to factor the impact of this JV into our estimates, particularly its positive net gearing impact, pending completion of the deal by 1QCY18.
“At this juncture, we do not foresee cash-calls unless there are significant acquisitions.”
This came on the back of IOI Properties unveiling a core net profit of RM911 million for FY17, which beat Kenanga Research’s expectations but was in-line with market at 113 and 98 per cent of respective full-year estimates.
“These results positively surprised us due to higher-than-expected property billings and margins, thanks to Trilinq, Singapore,” it said. “FY17 sales came at a record high of RM2.85 billion, exceeding both management’s initial target of RM2.30 billion and our RM2.61 billion target.
“Note that 61 per cent of sales are overseas drivers.”
On a quarterly basis, core net profits for the fourth quarter of financial year 2017 (4Q17) was up by 194 per cent largely due to the development segment which saw both a 33 per cent top-line improvement and 28.2 ppt improvement in the segment’s EBIT margins to 45.2 per cent.
“This was driven by higher recognitions of the completed Trilinq, which are seeing higher sales. Furthermore, the previous quarter expensed one off additional buyers’ stamp duty with interest arising from Trilinq.
“Year on year, FY17’s core net profits is up by 40 per cent on higher progress billings and share of associates/JCE turning into the black. The group’s net gearing has been reduced to 0.57 times from last quarter’s peak of 0.74 times.”