IOI Properties Group Bhd (KLSE:IOIPG) is among the largest property development corporations in Malaysia. Its roots can be traced back to 1984. In that year, the IOI Group began its venture into property development by acquiring Bukit Kelang Development Sdn Bhd, Rapat Jaya Sdn Bhd and Eng Hup Industries Sdn Bhd.
In 1990, IOI Properties had commenced the development of Bandar Puchong Jaya. Today, it is one of the most comprehensive self-contained township developments in the Klang Valley. Ever since, it has expanded its presence southwards to strategic locations in Negeri Sembilan, Melaka, Johor and even down to Singapore.
From 2009 to 2013, IOI Properties operated as a subsidiary and the property arm of IOI Corporation Bhd. Subsequently, on 15 January 2014, IOI Properties was demerged from IOI Corporation Bhd and is listed under IOI Properties Group Bhd (IOI Properties). In this article, I’ll share 8 things you need to know about IOI Properties before you invest.
#1: Stock Symbol
Ticker Symbol: KLSE: IOIPG / KLSE: 1635
Market Capitalization: RM 11.07 Billion (29 September 2017)
Share Price: RM 2.01 (29 September 2017)
Syariah Compliant: Yes
#2: The Business
Presently, IOI Properties derives income from three main business divisions. They are:
IOI Properties is positioned as a reputable township developer in Malaysia. It is capable of executing development projects where their land sizes are well beyond 100 acres. Its notable projects include Bandar Puchong Jaya, Bandar Putra Kulai, Bandar Putra Segamat, 16 Sierra, Bandar Putra Bangi and Bandar Putra Warisan.
In Singapore, IOI Properties is involved in high-end residential and integrated mixed developments. This includes Seascape and the Cape Royale in Sentosa Cove. Meanwhile, in China, IOI Properties has two projects. They are IOI Palm City and IOI Park Bay. Both projects are located in the Fujian Province, China.
This division is the largest income contributor to IOI Properties. In 2017, IOI Properties had derived RM 3.71 Billion and RM 1.18 Billion in revenues and operating profits from this division.
This division derives income from seven key investment properties. They include IOI City Mall in Putrajaya, IOI Mall Puchong, IOI Mall Kulai, 4 Blocks of 12-storey & 21-storey office buildings in Puchong Financial Corporate Centre, IOI City Tower 1 & Tower 2, One and Two IOI Square, and IOI Boulevard. It is the second largest income contributor to IOI Properties as this division contributed RM 302.1 Million and RM 126.5 Million in revenues and operating profits in 2017.
Leisure & Hospitality
This division derives income from six hospitality properties. They include Putrajaya Marriott Hotel, Four Points by Sheraton Penang, Palm Garden Hotel, Palm Garden Golf Club, Palm Villa Golf & Country Resort and Le Meridien Putrajaya. In 2017, this division has made RM 161.8 Million and RM 15.4 Million in revenues and operating profits, making it the smallest division of IOI Properties.
#3: The Financials
Overall, IOI Properties has achieved growth in sales and shareholders’ earnings over the last 5 years. This is attributed to continuous growth in all of its business divisions during the period.
Returns on equity (ROE) has dropped marginally as the growth in shareholders’ equity of IOI Properties had outpaced its growth in shareholders’ earnings during the period. This is mainly because IOI Properties had substantially increased its shareholders’ equity by completing two separate rights issue exercises on 9 February 2015 and 28 March 2017.
Figures in RM Million
Source: Annual Reports
#4: Growth Plans
IOI Properties has revealed the following plans to expand its income in the immediate future. They include:
As at 30 June 2017, IOI Properties has 15 ongoing projects worth RM 53 – 54 Billion in Gross Development Value (GDV). This includes new and major developments such as IOI Resort City in Putrajaya, Bandar Puteri Bangi, Bandar Puteri Warisan and i-Synergy. From its website, I’ve learnt that IOI Properties has a total of 10,000 acres of land bank in Malaysia and overseas.
On 11 November 2016, Wealthy Link Pte Ltd, a wholly-owned subsidiary of IOI Properties, had successfully tendered for a parcel of land measuring 1.09 hectares in Central Boulevard, Singapore for the price of S$ 2.57 Billion.
Subsequently, on 12 June 2017, it had announced the signing of a memorandum of agreement with HongKong Land International Holdings Ltd, a SGX-listed company to jointly develop and manage the land at Central Boulevard. IOI Properties will hold 67% of the proposed joint venture.
Hotel & Leisure
On 24 March 2017, IOI Properties had officially launched the 634-room JW Marriott Hotel Singapore South Beach. It had opened its spa services in May 2017 and expects to open its re-modelled ballroom in September 2017 and introduce more food & beverage outlets between mid-2017 to early 2018. Currently, it is enjoying more than 70% in occupancy rate since its opening.
Inevitably, IOI Properties faces several inherent risks such as:
The property development industry is competitive with the existence of major players such as Sime Darby Properties, SP Setia, Eco World, Mah Sing, IJM, and Gamuda Land. Competition arises from securing land bank, supply of raw materials, labour, and even potential buyers. Profit margins will be adversely impacted if developers failed to pass on heightened costs of land acquisitions, labour, and raw materials to its buyers in the form of higher property sales prices.
IOI Properties has significant presence in Singapore and China. Its financial results will be impacted by movements in the Singapore Dollar and the Renminbi against Ringgit Malaysia.
As I write, IOI Properties is trading at RM 2.01 a share. In 2017, IOI Properties had recorded RM 0.184 in earnings per share (EPS). Thus, its current P/E Ratio works out to be 10.91. Also, as at 30 June 2017, IOI Properties has reported to have RM 3.31 in net assets a share. Thus, its current P/B Ratio works out to be 0.61.
#7: Investors Relation
For further enquiries on IOI Properties Group Bhd’s Investors Relation matters, you may contact:
Mr. Chee Ban Tuck
Designation: Assistant General Manager, Corporate Finance
Telephone: (603) 8947 8888
#8: Major Shareholders
As at 30 August 2017, the substantial shareholders of IOI Properties Group Bhd are:
– Tan Sri Dato’ Lee Shin Cheng: 61.30%
– Employees Provident Fund Board: 4.38%
– Amanah Saham Bumiputera: 3.81%
What Do You Think Of IOI Properties As An Investment? Will You Invest In It? Share Your Views Below
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The information provided is for general information purposes only and is not intended to be any investment or financial advice. All views and opinions articulated in the article were expressed in Ian’s personal capacity. It does not in any way represent those of his employer and other related entities. Ian does not own any companies mentioned.