Analysts see better earnings outlook for IOI Properties, driven mainly by investment properties division and turnaround of leisure & hospitality segments.
In a report on the company's prospects, MIDF says it also maintains a buy call on IOI Properties as it revises the FY23F earnings forecast by +2.8% after factoring in lower expenses.
"We also introduce our earnings forecast for FY24. Our TP for IOI Properties Group is unchanged at RM1.29, based on 68% discount to RNAV. We maintain our BUY call on IOI Properties Group as we see better earnings outlook for IOI Properties Group, driven mainly by investment properties division and turnaround of leisure & hospitality segments. Valuation of IOI Properties Group is also attractive, trading at steep discount of 74% to latest NTA of RM3.71 per share," says MIDF.
Earnings Above Expectations?
IOI Properties Group FY22 core net income of RM715m came in slightly above expectations, making up 108% of our and consensus estimates.
The slight earnings surprise could be attributed to the lower than expected expenses in 4QFY22. No dividend was announced for FY22.
High base in FY21
Sequentially, 4QFY22 core net income increased to RM201.5m (+18.2%qoq) mainly due to lower operating expenses and higher contribution from joint ventures.
That brought FY22 core net income to RM715m (-10.6%yoy). Core net earnings were lower in FY22 despite higher topline (+4.1%yoy) as earnings in FY21 were high base, boosted by contribution from JV in Singapore.
Meanwhile, operating profit of property development division was higher, driven by higher sale of properties in Malaysia and higher contribution from project in China.
Similarly, operating profit of property investment division improved on the back of contribution from leasing income from IOI Mall, Xiamen and higher rental income from its shopping malls in Malaysia.
FY22 New Property Sales
IOIPG reported new property sales of RM616m in 4QFY22, higher than new property sales of RM418m in 3QFY22.
That brought total new sales to RM1.93b in FY22, lower than new sales of RM2.3b in FY21.
New property sales in FY22 were 77% contributed by project in Malaysia while the remaining 23% were contributed by project in China.
On the other hand, unbilled sales increased to RM605m in 4QFY22 from RM537m in 3QFY22, providing less than 1year earnings visibility to property development division.