IOI Property raised to 'Buy' on asset unlocking prospects
KUALA LUMPUR: MBSB Research has upgraded IOI Properties Group Bhd to "Buy" from "Neutral", citing stronger visibility on "value crystallisation".
This will be driven by the company's ongoing land monetisation strategy and upcoming asset unlocking catalysts.
The firm raised its target price (TP) to RM4.64 from RM3.52, while keeping its earnings forecasts unchanged.
It said the re-rating is underpinned by a narrower revised net asset value (RNAV) discount of 18 per cent from 35 per cent previously.
This reflects improved confidence in IOI Properties' ability to unlock embedded value from its sizeable land bank and investment property portfolio.
MBSB Research said IOI Properties is continuing its active land monetisation strategy, despite recent land deals.
The group is looking to monetise about 1,295 hectares of non-core land bank, particularly in areas such as Melaka, Kulai and remaining parcels in Banting.
"We are positive on the land monetisation as IOI Properties has been sitting on huge land bank with low acquisition cost.
"The land monetisation allows IOI Properties to convert underutilised land into cash, realising value of its land bank and strengthening its balance sheet," the firm said in a note.
MBSB Research added that a key catalyst identified is IOI Rio City, a 40.47-hectare integrated township in Bandar Puteri Puchong with a gross development value (GDV) of RM12 billion and a 12-year development horizon.
The development will feature IOI Rio Mall, serviced apartments, lifestyle retail components, Grade A office towers, a five-star hotel, and potential medical facilities, alongside an 4.45-hectare town park.
The IOI Rio Mall, with a net lettable area of one million square feet, is currently under construction and is expected to be completed by 2030.
MBSB Research described the project as a "crown jewel", highlighting its potential to significantly enhance land value through its integrated mixed-use concept.
The firm added that another major catalyst is the planned listing of IOI Properties' real estate investment trust (Reit), which is expected to be completed in 2026.
It noted that the Reit will comprise assets valued at around RM7.58 billion, including IOI City Mall, several hospitality assets in Putrajaya and Kuala Lumpur, Courtyard by Marriott Penang, IOI City Towers 1 and 2 and Puchong Financial Corporate Centre.
MBSB Research said the Reit listing represents a key milestone in crystallising the value of IOI Properties' investment assets.
"We may see more value unlocking of its investment properties through injection of existing or new investment properties into IOI Properties Reit.
"Besides, the potential listing of its investment properties in Singapore namely IOI Central Boulevard, its landmark Grade A office tower in Marina Bay will also crystalise the value of the property," it said.