IOI Properties could nearly double its share price in 12 months, says its most bullish analyst

KUALA LUMPUR (Nov 17): IOI Properties Group Bhd (KL:IOIPG) could nearly double its stock price in the next 12 months from a spin-off listing of its assets, said its most bullish analyst.

The property developer is entering a “sweet spot” for the launch of a real estate investment trust (REIT) in Malaysia, supported by stronger asset fundamentals, rising investor appetite for yield assets and macroeconomic tailwinds, said Hong Leong Investment Bank.

“We believe that the stars are aligning to provide a highly favourable window to launch its Malaysia REIT,” the house said in a note.

Shares of IOI Properties have largely recouped their sharp losses during the global market turmoil in April. However, further gains have been limited by investor concerns over its high gearing from a shopping spree totalling over RM1 billion last year.

Hong Leong Investment raised its target price to RM4.15 and maintained its ‘buy’ call on the stock. The new target price is sharply above the consensus’ RM2.68, according to an average of nine analysts tracked by Bloomberg and the last price of RM2.08.

IOI Properties’ share price trades at 0.47 times book value, meaning that investors are effectively buying its assets at less than half of their carrying value, Hong Leong Investment noted.

“This discount appears excessive, especially as there is a clear asset monetisation strategy ahead while the current book value also remains understated,” the house said.

IOI City Mall in Putrajaya, Malaysia’s largest mall and the company’s crown jewel, and its hotels are likely to see a spike in valuations upon the REIT listing and lift the company’s book value above RM7 billion, Hong Leong Investment Bank said.

The house highlighted that higher consumer spending is boosting retail malls while Malaysia’s pivot towards high-value, high-tech industries is spurring demand for office space. The upcoming Visit Malaysia Year 2026 is expected to further boost hotel occupancy and room rates, it said.