IOI PROPERTIES GROUP BERHAD
KLSE (MYR): IOIPG (5249)
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Last Price
2.07
Today's Change
+0.01 (0.49%)
Day's Change
2.05 - 2.09
Trading Volume
2,323,000
Analysis
Discussions
5 people like this. Showing 50 of 3,339 comments
I am a little surprised with the big drop in IOIPG share price today, even after a weak set of results. To me and many analysts, the weak result was well expected as many have already flagged earlier the start of interest expense at IOICB (though I had hoped for it to be delayed to Q3 FY25 after the final TOP).
Without the RM108m interest expense and the extra high taxation, IOIPG could have made close to RM180-200m profits a quarter. Of course, another culprit is the weak performance of its property development segment in Q1 with sales of only RM331m.
I am now less confident of a brisk sales of Marina View Residences which IOIPG has delayed the official launching to early 2025 from this Nov-Dec 2024 quarter. I think it is due to the high premium pricing of SGD5,000 psf that it is asking, the initial response to its soft launch of 32 units in Marina View Residences has not been well received. I am not sure how the management is going to boost sales at this "champion" asset in Singapore.
3 weeks ago
Property investment (PI): IOICB’s occupancy improved to 68% and is expected to reach 70% by end-FY25. We understand IOICB only contributed revenue of RM55m for 1QFY25, which we estimate only reflected an about 35% effective occupancy due to rent-free periods, despite actual occupancy being 50% during that period, while full interest costs of RM109m were expensed. With higher occupancy now, the contribution from IOICB should improve. Management estimates breakeven of IOICB at 85% occupancy (we estimate management using assumption of 4.5-5% interest cost), but we believe 70-75% could suffice if rates fall to 3.5% (currently about 4%) in view of the interest rate cut theme in Singapore.
3 weeks ago
IOIPG has signed letters of intent with data centre players for the potential sale of two land parcels in Banting
and Kulai, each about 80 acres. We estimate these sales could generate proceeds of RM700m, likely can be recognised during FY26.
3 weeks ago
@dragon yes Marina View looks difficult. CDL almost sold out its Woodlands project while selling only 20% of its Havelock road project. SG prop market is now a tale of 2 cities. Suburbs do well, poreans buy. CBD challenging, 60% tax on foreigners, poreans don't buy because price will always be suppressed by low foreign demand.
IOIPG's style...they may be happy to keep inventory than sell cheap. Rich ppl thinking. Marina View could well be a drag whereas IOICB and W should be doing very well.
I would assume the worst for the residential project in Marina, while being optimistic on REITing IOICB and the Msia properties
3 weeks ago
IOIPG style - Marina View is guaranteed to look good and will be a trophy asset even for individual owners and an addition to the Marina skyline, but consistent with IOIPG style they will rather get stuck with it than price it to sell. How does that work towards share price - on balance likely negative than positive.
3 weeks ago
Their land cost was $1379psf ppr. Marina Bay Residences is selling between 2-3k psf, and Marina One 2-4kpsf currently depending on view. Poreans pay A LOT for the view. IOIPG intends to price it at around 100% premium over the closest projects 😅
3 weeks ago
The observation below may be true that the rental income from IOICB should have been higher than RM55m if occupancy rate was at 50%. I calculate it to be RM83m at 50% occupancy rate at SGD13 psf for a quarter. The discrepancy could be due to some rent-free period for certain initial tenants, or due to some overhead costs that reduce the gross rental income.
Even based on current interest rate of 4.5%, IOICB should turn around when its occupancy rate achieves 70% based on my calculation: 1.29m sf x 70% x SGD13 psf x 3 mths x 3.30 = RM116 million of gross rental income, higher than the interest expense of RM109m in Q1.
Posted by UncleFollower > 1 hour ago | Report Abuse
Property investment (PI): IOICB’s occupancy improved to 68% and is expected to reach 70% by end-FY25. We understand IOICB only contributed revenue of RM55m for 1QFY25, which we estimate only reflected an about 35% effective occupancy due to rent-free periods, despite actual occupancy being 50% during that period, while full interest costs of RM109m were expensed. With higher occupancy now, the contribution from IOICB should improve. Management estimates breakeven of IOICB at 85% occupancy (we estimate management using assumption of 4.5-5% interest cost), but we believe 70-75% could suffice if rates fall to 3.5% (currently about 4%) in view of the interest rate cut theme in Singapore.
3 weeks ago
The figure of RM700m gross proceeds is largely inline with my calculations:
80 acres x 2 x 43,560sf x RM100 psf = RM697 million.
But it is just a letter of intent, and may not happen if the DC player is not able to secure enough power supply or water supply.
Posted by UncleFollower > 1 hour ago | Report Abuse
IOIPG has signed letters of intent with data centre players for the potential sale of two land parcels in Banting
and Kulai, each about 80 acres. We estimate these sales could generate proceeds of RM700m, likely can be recognised during FY26.
3 weeks ago
@UncleFollower, yes Marina View Residences will be a drag to IOIPG earnings if they are not willing to lower the selling price. I do not see any chance for them to sell any unit in Marina View Residences at SGD5,000 psf if there are still units on offer at SGD2k-4k in surrounding area. The only chance is to get their business partners to each buy one or two units, but it will never get to even 10% sales of the 668 units on offer.
Posted by UncleFollower > 1 hour ago | Report Abuse
Their land cost was $1379psf ppr. Marina Bay Residences is selling between 2-3k psf, and Marina One 2-4kpsf currently depending on view. Poreans pay A LOT for the view. IOIPG intends to price it at around 100% premium over the closest projects 😅
3 weeks ago
But as you said, I am placing more hope on IOICB ramping up the occupancy rate to over 90% by end June 2025 then IOIPG will be able to inject it into a REIT. It will get back at least SGD2.0 billion of cash to pare down the borrowings at IOICB to SGD1.0 billion or below, then the group will be on a much stronger footing.
Besides this, I am also optimistic of the industrial park segment performance in 2025. I read that they have managed to secure few parcels of industrial lots sale at its IOI Industrial Park Banting in just few weeks of launch. I am also optimistic of the 80 acre land sale to a DC player in its Industrial Park at Iskandar.
3 weeks ago
There is report / news that Johor is not approving DC projects due to constraint in resources.
I guess any potential land deals for DC will make purchasers think twice. Especially those SPA that is yet to complete.
3 weeks ago
Once IOICB is REITed, the group borrowings will get reduced by SGD2.0 billion and hence interest expenses reduced by RM268 million a year. If IOIPG lists up 50% stakes of IOICB, it will book in higher profit of RM135 million a year purely from savings in interest expenses. If we include much less depreciation charge (assuming SGD60m a year) of IOICB and no tax (assuming tax saving of SGD10m a year) with the REIT structure, IOIPG will book in extra profit of SGD70m/2 or RM230m/2 a year to bring the total earnings contribution from IOICB REIT to RM250 million a year for its 50% stakes.
And the group net gearing will be reduced to 0.4x from currently 0.73x, to be inline with peers. That will be the game changer.
3 weeks ago
@Jesse1314, that is a valid concern. I believe the DC player only signed a letter of intent, and not an outright sale because of the uncertainties around power supply and other authority approvals. But I am confident that they should be able to seal the deal in 2025 and resolve the other constraints for the DC player.
Posted by Jesse1314 > 7 minutes ago | Report Abuse
There is report / news that Johor is not approving DC projects due to constraint in resources.
I guess any potential land deals for DC will make purchasers think twice. Especially those SPA that is yet to complete.
3 weeks ago
From the tone of the management at briefing, it sounds to me that setting up a commercial REIT in Malaysia may come even earlier than the Singapore REIT for IOICB which will still need time for its occupancy rate to ramp up to 90% or above.
On the other hand, IOI City Mall is already ready for injection into a REIT, as Phase 1 has been in operations since November 2014 and Phase 2 was opened in August 2022. The occupancy rate at IOI City Mall has surpassed 96%, and the group is planning for Phase 3. IOIPG could package IOI City Mall Phase 1 & 2, together with IOI Mall Puchong and IOI Mall Kulai in an initial setting up of the REIT almost immediately, though it may get higher valuation after IOI City Mall Phase 2 goes through one round of rental renewal in August 2025 (after 3 years of operations). The listing of these 3 malls could fetch a valuation of over RM6.5 billion.
Then after the completion of the acquisition of Tropicana Gardens Mall in Q1 2025, and once the occupancy rate at TGM ramps up from the currently 76% to over 90%, this mall can then be injected into the REIT. This mall could fetch a valuation of over RM1.0 billion (compared to the acquisition cost of RM680m by IOIPG).
If needed, the commercial REIT could be expanded by injecting the matured office towers of IOIPG, which could fetch another RM2 billion or so.
The 5,000-room-strong hotel arms of IOIPG would be another prime assets for injecting into a hospitality REIT worth some RM2.0-2.5 billion.
3 weeks ago
@bullrun2025, I cannot do much besides just holding onto what I have.
My average entry cost is about RM2.20, same level as foreign funds who bought in Mar-June 2024. So I am not worried of any large scale selling by funds below RM2.00. I still see good support at RM1.80-2.00 level.
As the prospects of IOIPG are still very good in 2025, I see most funds will hold on for medium to long term investments.
No doubt, there are some funds who are disappointed with the temporary earnings lull of IOIPG in this quarter and next. They are selling now, but the falling share price should attract other funds to come in for longer term investment.
3 weeks ago
@dragon more like 2.15 don't forget 5c dividend 😃
And you can gear up your position 1:1 at this level. Margin call is extremely unlikely, 1:1 we will have about 30% buffer
3 weeks ago
We need sentiment to turn again for property and construction counters. On the ground, it's already turning. Msia property is now better than before. For shares to turn we need both PMX's Johor plans + President Trump shouting low rates even tho he's already shouting low rates.
3 weeks ago
Counting shareholding spread almost NEVER works in the short term. So often we will be holding on to a downtrending stock which is tightly held by controlling + instituitional shareholders, and then wonder how come it is falling like a rock? Who is selling?
3 weeks ago
But very often, it works out well in the long term. The big guys are either tolerating the steep fall or benefitting from it. When the time comes it just goes up more easily than a counter w loosely controlled shareholdings.
3 weeks ago
He disagrees with suggestions that IOI Central Boulevard Towers is too new to be included in a REIT. Some REIT managers figure they need to let a particular asset “stabilise” first - with at least one leasing cycle of three years- before selling the asset into a REIT. Not so from Lee’s perspective. “If I can lock in at $15, I am happy to leave something behind on the table for other investors,” says Lee, referring to the rental rates and upside he is projecting from leasing out IOI Central Boulevard Towers.
Besides the office REIT, Lee is potentially securitising some of the mall and hospitality assets in Malaysia too. As for IOI Properties itself, Lee will keep its primary listing in Malaysia.
Remark: Singapore REITS may come sooner than Msia REITS
3 weeks ago
Johor-Singapore Special Economic Zone: The countdown begins
The JS-SEZ will span across six districts – Johor Bahru, Iskandar Puteri, Pasir Gudang, Pontian, Kulai and Kota Tinggi.
https://www.britcham.org.sg/news/johor-singapore-special-economic-zone-countdown-begins
3 weeks ago
Asked if there will be any data centres at its industrial parks, Teh said the group has received “quite a few enquiries” from data centre players for its industrial parks in Banting and Iskandar Malaysia.
“Hopefully we can have some good news in the next one or two months,” he added.
https://theedgemalaysia.com/node/726505
3 weeks ago
@hng33, I did read the comment given by some bankers to IOIPG re the REIT listing of IOICB. tend to agree with Mr. Lee's argument that it should be listed if they can get rental rate of S$15 psf. I would go a step further, just go for the listing once occupancy rate achieves 95%! NO need to wait till rental rate goes up to S$15 psf.
You need to leave some upside to investors who buy into the REIT. And the upside will come when IOICB revises up the rental rate 2 years later.
Posted by hng33 > 31 minutes ago | Report Abuse
He disagrees with suggestions that IOI Central Boulevard Towers is too new to be included in a REIT. Some REIT managers figure they need to let a particular asset “stabilise” first - with at least one leasing cycle of three years- before selling the asset into a REIT. Not so from Lee’s perspective. “If I can lock in at $15, I am happy to leave something behind on the table for other investors,” says Lee, referring to the rental rates and upside he is projecting from leasing out IOI Central Boulevard Towers.
Besides the office REIT, Lee is potentially securitising some of the mall and hospitality assets in Malaysia too. As for IOI Properties itself, Lee will keep its primary listing in Malaysia.
Remark: Singapore REITS may come sooner than Msia REITS
3 weeks ago
IOI property rush to list Singapore REITS as it will increase IOI property trademark in Singapore market, pave way for subsequent new properties launched. In additional, listing REITS before mature can attract more retail and institutional fund to subscribe its REITs as it give investor higher future upside rental rate potential
Despite opt REITS listing to pare down group borrowing cost. if IOI properties opt to retain stake under 50%, IOI properties can decoupling Central Boulevard Towers debt level entirely under REITS, free up group gearing
3 weeks ago
Other factors lead IOI property to list Singapore REITS is 0% tax free status for all income as long 90% profit distributed compared to corporate tax 17%. Likewise, Malaysia REITS also enjoy tax exempted compare to group tax at 24% level.
3 weeks ago
The Johor-Singapore Special Economic Zone (JS-SEZ) is a joint initiative between Malaysia and Singapore to increase economic connectivity and business growth in the region:
Goal:
1. To improve the cross-border movement of people and goods.
2. Location: Spanning six districts in southern Johor, including Johor Bahru, Iskandar Puteri, Pasir Gudang, Pontian, Kulai, and Kota Tinggi.
3. Focus industries: Logistics, financial and business services, tourism, food security, education, healthcare, the digital economy, energy, and manufacturing.
4. Incentives: Special tax arrangements, passport-free clearance, training incentives, and joint events promotions.
5. Benefits: The JS-SEZ is expected to attract foreign direct investment, encourage technology transfer, and stimulate growth across various industries.
3 weeks ago
Monthly rental rates at IOI Central Boulevard Towers are between $14 and $15 psf. Blue-chip tenants such as Amazon and Morgan Stanley have already pre-leased 40% of the 1.26 million sq ft premium Grade-A office space at IOI Central Boulevard Towers.
In July 2022, Amazon signed up for 369,000 sq ft of space, while in June 2023, Morgan Stanley was said to be relocating from Capital Square and taking up between 90,000 and 100,000 sq ft across five floors in the new office blocks.
3 weeks ago
“Looking ahead, sequential improvements are expected, supported by higher occupancy at IOI Central Boulevard (IOICB) and reduced interest costs as rates decline, increased JV contributions from improved South Beach office occupancy, recognition of the Melaka land sale in 3Q25 for an estimated RM70mil net gain and initial contributions from Marina View Residences,” the research house said.
HLIB Research has a target price of RM4.05 a share for the counter based on a 35% discount to its estimated revised net asset value (RNAV) of RM6.24 a share.
It added IOIProp’s business prospects in Malaysia, Singapore and China are currently seeing a rejuvenation and the group will see significant value from its assets in Singapore, IOICB and Marina View Residences, which should anchor strong earnings ahead for 2025 and beyond.
2 weeks ago
IOI properties earning kicker is Marina View fetch gross development value SGD 3.65 billion. Marina View development is 51-storey, mixed-use development which IOI purchased for SGD 1.508 billion in September 2021 consist of 350-room luxury hotel, W Singapore with perched on top of the W hotel is the 683-unit luxury condo Marina View Residences
2 weeks ago
The worst is over for IOIPG, buy more IOIPG.
Don't miss FPHB as well. Multibagger stock in year 2025.
2 weeks ago
The Gemas–Johor Bahru Electrified Double-Tracking Project will be completed early next year. It will benefit IOI industrial properties which capitalize on railway line along its Kulai Industrial park, Gemas Industrial park and Segamat industrial park
2 weeks ago
IOI Central Boulevard Towers
Fully Fitted
Rental: S$ 50,424 /mo
Size: 3,056 sqft
Rate: S$ 16.5 psf
https://www.commercialguru.com.sg/listing/for-rent-ioi-central-boulevard-towers-25419167
Typical Bare unit, rate is minimum S$ 14 psft
prime bare unit can fetch S$ 17.5 psft
https://officesolutions.com.sg/directory/ioi-central-boulevard-towers/
2 weeks ago
Wow that is much higher than the average rate of S$13.00 psf secured for the 68% office space so far.
I think once the final TOP is received later this month, the occupancy rate at IOICB will jump up to at least 80%.
Now the 68% occupancy rate is almost full occupancy for the office space that has received TOP1 and TOP2.
2 weeks ago
dragon328
Generally, first few anchor mover will be granted early bird special discount such as Amazon and Mongan Staney, Once secure 50% occupancy rate, landlaord will normalize their rental rate.
Initial rental income needs to offset agent commission fee and account for free rental grace period for fitting. Once this gestation period is over, only the real rental income can fully account.
Profit margin increasing= rental income (increasing opponency) - interest expense (decreasing interest rate in accord to Fed rate commence begin Sept 2024, Nov 2024 and upcoming Dec 2024 which IOI have yet to account any in its latest in Q1 FY2025 which ended in Sept)
2 weeks ago
Next upcoming major kicker for IOI are
1. Marina View fetch gross development value SGD 3.65 billion
2. Johor-Singapore special economic zone
3. official land disposal for 2 data center, with potential cum as developer with leaseback agreement for recurring profit instead of outright sale.
4. The Gemas–Johor Bahru Electrified Double-Tracking Project to be operate in first half 2025. It will benefit IOI industrial properties which capitalize on railway line along its Kulai Industrial park, Gemas Industrial park and Segamat industrial park
5. REITS
6. HSR
7. More Fed rate cut
8. higher occupancy rate in Central Boulevard tower
2 weeks ago
The “Kulai Fast Lane,” a key initiative designed to facilitate the entry of foreign investments, will now be expanded into a larger program known as the Invest Malaysia Facilitation Centre.
This expansion aims to further enhance the ease of doing business in Johor, focusing on simplifying regulatory processes and providing investors with the necessary support to launch and grow their ventures.
Since its inception, the Kulai Fast Lane has successfully facilitated over 38 investments worth a staggering RM52 billion, proving the state’s growing prominence as a regional investment hub.
The new Invest Malaysia Facilitation Centre is expected to build on this success, making Johor an even more attractive destination for global investors looking to tap into the dynamic Southeast Asian market.
With the signing of the JS-SEZ agreement and continued investments pouring into Johor, the state is poised to emerge as a leader in Malaysia’s economic landscape, driving growth, innovation, and cross-border collaboration for years to come.
2 weeks ago
Malaysia PM says signing of Johor SEZ deal with Singapore likely postponed to January
04 Dec 2024 12:56
A PLANNED signing between Malaysia and Singapore of a deal to create a special economic zone (SEZ) in the southern Malaysian state of Johor will likely be postponed to January, Malaysia Prime Minister Anwar Ibrahim said on Wednesday (Dec 4).
The signing, originally planned for Dec 9 during the two countries' annual leaders' retreat, had to be called off after Singapore Prime Minister Lawrence Wong contracted Covid-19 this week, Anwar told the senate.
On Tuesday, Wong said on Facebook he was self-isolating at home after testing positive for Covid-19 for the first time.
The South-east Asian neighbours in January agreed to develop the SEZ in Johor, just north of Singapore, aiming to attract investment and free up the movement of goods and people.
Proposals for the project include a passport-free immigration clearance system, as well as cooperation on renewable energy and simplifying business approvals.
2 weeks ago
IOI properties, next Sunway ! both share similar business model, only different is IOI properties yet unlock value through REITS. Within next 1-2 year, it should be ripe time for IOI properties to trade above its current NTA
2 weeks ago
https://www.msn.com/en-us/money/markets/china-vows-to-ramp-up-policy-stimulus-to-spur-growth-in-2025/ar-AA1vwzi2?ocid=BingNewsSerp
IOI properties have big exposure in Xiamen, China namely IOI Palm City, Palm City Mall, Hotel and IOI Palm International Parkhouse
1 week ago
Based on HLIB report, IOIPG will start seeing earnings contribution from its IOI Business Park Office in Xiamen, China from October 2024 onwards after achieving 100% occupancy in Q3 CY2024.
Besides the 370-room Sheraton Grand Hotel of IOIPG in Xiamen, China will complete construction in this quarter, and is on track for opening before CNY next year or Q1 CY2025.
We can expect much higher contribution from the China property segment to IOIPG in coming months.
1 week ago
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UncleFollower
Guys don't forget, this kinda of result surely knee jerk sell-off. And when they annoounce DC land sale, also knee jerk buy-up. While waiting, we can trade around our position for dividends. Just becareful on the upside for a good counter - kena too many times - keep selling then no more shares to sell and either watch it fly or forced to buy back higher 😅
3 weeks ago