Building on a solid foundation

IOI Properties Group Bhd
Property developer IOI Properties Group Bhd (KL:IOIPG) returns to the winners list of The Edge Billion Ringgit Club (BRC), after a one-year hiatus following its maiden trophy win in 2023.

Strong earnings growth helped IOIPG bag the same BRC award for highest growth in profit after tax (PAT) over three years among property companies with a market capitalisation of above RM3 billion, proving its resilience while navigating a competitive property market.

The group comprises three primary segments, namely property development, property investment and hospitality and leisure, with a presence in Malaysia, Singapore and China.

IOIPG is known as master planners of integrated townships such as the 939-acre Bandar Puchong Jaya, the 930-acre Bandar Puteri Puchong and the 358-acre IOI Resort City in Putrajaya, with a land bank of about 8,300 acres and 22 ongoing projects and developments. The expansion of all its primary segments is expected to continue to sustain the group in the long term.

In 2024, the group launched in Salak Tinggi, Sepang, the 17-acre Senna Puteri, which has a total of 12 phases comprising residential, commercial and recreational components with an estimated gross development value (GDV) of RM2.7 billion.

Its share price closed at RM1.98 at the BRC membership cut-off date of March 28, 2025, growing just over 30% per annum over three years from 89.4 sen as at March 31, 2022. Closing at RM2.23 on Aug 29, IOIPG had a market capitalisation of RM12.28 billion.

During the BRC awards evaluation period, IOIPG’s net profit reached RM2.06 billion for the financial year ended June 30, 2024 (FY2024), up from RM1.39 billion in FY2023, RM686.7 million in FY2022 and RM660.2 million in FY2021 — translating to a stellar 46.2% three-year PAT compound annual growth rate that beat sectoral peers.

Its net profit rose significantly in FY2024, mainly due to a fair value gain of RM1.9 billion on investment properties in its 4Q.

However, IOIPG’s FY2025 net profit dropped 48% to RM1.06 billion, mainly due to higher interest expense following the commencement of operations of IOI Central Boulevard Towers in Singapore, despite a 4% year-on-year gain in revenue to RM3.06 billion on better contributions from the property investment and hospitality and leisure segments. The group declared a higher dividend of eight sen per share for FY2025, up 60% year on year.

Group CEO Lee Yeow Seng, who was redesignated from executive vice-chairman in 2023, expressed confidence in delivering sustainable earnings growth, building on the group’s solid foundations, banking on its diversified product offerings across three countries, the sizeable recurring income stream from the group’s established property investment portfolio and the favourable outlook of the hospitality and leisure segment.

On Aug 26, the group confirmed that it is planning a real estate investment trust (REIT), to be listed on Bursa Malaysia’s Main Market following its incorporation of subsidiary IOIPG REIT Management Sdn Bhd as the REIT’s manager.

Kenanga Research, which has a RM2.01 target price for IOIPG, expects its Central Boulevard Towers’ committed occupancy of 88% to translate favourably to near-term rental income, which would offset its high interest cost. IOIPG’s acquisition of the remaining 50.1% equity stake in Scottsdale Properties is slated to be completed soon (3QFY2025), which would also contribute positively to the segment.

“However, this acquisition is also expected to weigh down on the group’s gearing further (already at 0.7 times) as its purchase would be funded by loans,” Kenanga wrote in a note dated Aug 27.

The research house adds that the incorporation of its REITs subsidiary confirms the group’s intention to spin off several investment assets and pare down debt.

In its note on Aug 26, CGS International says the upcoming official launch of W Residences, Marina View, in October could provide further sales visibility given its average selling price of S$5,000 (RM16,404.47) psf. The research house, which has a target price of RM3.25 for IOIPG, says the group expects stronger earnings ahead as its investment assets remain resilient with improved occupancies for Central Boulevard, as well as stable occupancy rates at its other retail and office properties.

Despite anticipating short-term headwinds, IOIPG has an RM2 billion new sales target for FY2026 and, at the time of writing, was in advanced talks for potential sales of industrial land in Johor. “Downside risks include delays or lower valuations in its REIT monetisation exercise and the introduction of unfavourable housing policies in both Malaysia and Singapore,” CGS said.

TA Research, which maintained its target price of RM2.78 for IOIPG, said that the Malaysian pipeline projects for FY2026 include high-rise developments in Bandar Puteri Puchong, 16 Sierra and IOI Resort City, as well as landed residential projects in Kulai, Johor.

“The property investment segment will continue to anchor earnings, supported by stable recurring income and a strong 6% portfolio rental reversion, prompting an upward revision in retail mall valuations. The hospitality & leisure segment is also poised to benefit from Malaysia’s rising tourist arrivals and the upcoming Visit Malaysia 2026 campaign, which have already lifted hotel occupancy and room rates. In China, while macro challenges persist, the newly opened Sheraton Grand Xiamen Jimei in China is showing encouraging improvements in occupancy since its launch,” TA Research writes in its Aug 27 note.