IOIPG Delivers a Sustainable and Resilient Recovery
Putrajaya – IOI Properties Group (“IOIPG”) has recorded a revenue of RM691.5 million in Q1 FY2023 which is a 60% increase compared to the preceding year corresponding quarter of Q1 FY2022. The Group’s strong start is attributed to better performances across all its business segments particularly the hospitality and leisure segment which saw a sterling recovery of more than 400% in revenue. Profit before tax was recorded at RM689.7 million following a recognition of fair value gain of RM470.4 million arising from the completion of IOI City Mall Phase 2 and a strong turnaround of hospitality and leisure and property investment segments.
In the property development segment, the Group achieved a revenue of RM529.9 million, which is a 46% increase compared to the preceding year corresponding quarter. This was attributable to higher sales contributions from Malaysia operations despite the property industry being impacted by inflationary pressures and global supply chain disruptions. In the Klang Valley, new developments have been launched in Sepang, namely Arena Xchange which has registered a 100% take-up rate as well as Arena Residences. Meanwhile, the soft launch of developments in Johor, namely Sonatia, Piccolo and Arcela received good responses during the opening of IOI Sales Galleria at Bandar Putra Kulai, Johor.
The Group’s property investment segment’s revenue rose to RM110.1 million which is an improvement of 86% in performance compared to the preceding year corresponding quarter. This substantial increase in financial performance was mainly due to the low base effect recorded in Q1 FY2022 and partially contributed by the commencement of recurring leasing income from IOI City Mall Phase 2 following its business commencement on 25 August 2022.
With the launch of Phase 2, IOI City Mall featured the addition of 1 million sq. ft. in net lettable area (NLA) and now comprises a total of 2.5 million sq. ft. of NLA, distinguishing it as the largest mall in Malaysia. Furthermore, the better performance in this segment continues to be positively impacted by the easing of restrictions, the recovery of the economy and the return of higher levels of footfall in retail malls. The Group is well-positioned to enhance its recurring income as IOI City Mall continues to strengthen its income stream in tandem with progressive openings by new tenants such as IOI City Farm, an edutainment park and IOI Sports Centre in addition to the existing attractions, notably D21 Adventure Park and Icescape, an Olympic sized ice-skating rink.
For the Group’s hospitality and leisure segment, its contributions increased from RM7.6 million to RM48.7 million in revenue compared to the preceding year corresponding quarter. This better performance was a result of resilient domestic tourism that has driven the hospitality industry to gradually regain its momentum. Meanwhile, the refurbishment of its hotels, namely Putrajaya Marriott Hotel and Palm Garden Hotel, Putrajaya, a Tribute Portfolio Hotel, will ensure that it is well poised to meet any increase in domestic and international travellers.
“IOIPG has continued to deliver resilient results despite the challenges. I am confident that we are on the right track to achieving our targets in FY2023 as our business segments are well positioned for sustained growth,” said Dato’ Voon Tin Yow, Chief Executive Officer of IOIPG.
The steady recovery of our nation’s economic sectors continues to be underpinned by improved domestic demand, labour market conditions and income levels as well as the full reopening of economies and international borders. Nevertheless, the global business environment remains challenging as it envelopes uncertainties such as rising cost pressures, tighter financial conditions and geopolitical tensions.
To address these challenges within the Group’s property development segment, IOIPG will be focused on offering products that are aligned with initiatives launched by the Government. Furthermore, the Group recently launched ‘IOI Buy With Tenant’, a marketing campaign which offers a rental yield of up to 6% for selected IOIPG commercial properties, which is expected to boost its sales strategy and enhance its product offerings. Apart from commercial properties, the Group has been preparing to launch its latest affordably priced range of residential products within Klang Valley. In efforts to ensure that these range of products remain affordable and competitive, IOIPG is determined to mitigate the impact of the rising cost of building materials by intensifying its efforts in the sourcing of building materials and the implementation of Industrialised Building System (IBS). Moving forward, the Group looks forward to its pipeline of projects, mainly comprising affordable landed and high-rise developments worth RM1 billion, to be launched within Malaysia.
Voon added, “The rise in interest rates and cost of living has increased the demand for affordably priced homes within the housing market. Hence, our product range will remain flexible to meet the rising demand in this space. To assist prospective homebuyers, the Group has sales packages with attractive financing aid through IOI Finance on selected IOIPG projects.
Down south in Singapore, Singapore’s efforts to build an international financial hub enjoys a post-Covid resurgence, attracting investors drawn to its stability. However, interest rate hikes coupled with increase in Goods and Services Tax starting January 2023 may induce softer growth in the shorter term. IOI Central Boulevard Towers, which is slated for completion in 2023 has secured a significant international anchor tenant and this is expected to promote a strong tenant mix for the development.
Meanwhile, in the People’s Republic of China (PRC), the property sector continues to be affected by the nation’s strict zero-Covid policy. However, the Chinese government has recently unveiled sweeping measures to support the property sector and reinvigorate the economy. In response to this, the Group has launched its marketing campaign in conjunction with the new financial policies rolled out by the Chinese government to drive sales of its completed developments in Xiamen. On a separate note, the Group has also continued to adopt a pragmatic tenant retention strategy to maintain occupancy rates at IOI Mall Xiamen in support of our tenants and business partners that have been affected by strict operating procedures and movement control.
Moving forward, IOIPG remains cognisant of global challenges as it looks ahead to navigate through substantial headwinds across its developments in Malaysia, Singapore and PRC. The Group is confident that recurring earnings from its various property investment portfolios as well as its pipeline of new projects and launches, which comprises offerings ranging from double storey homes and town houses to cluster semi-d homes and bungalows, will continue to lay a strong foundation to ensure the sustainability of the Group’s earnings across all business segments for the long-term.