Wide product offerings augur well for IOIProp

PETALING JAYA: IOI Properties Group Bhd (IOIProp) is leveraging on its planned new launches, wide product offerings, recurring earnings from various matured property investment portfolios and recovery of the tourism sector to buoy its earrings in the near term.

It added that despite the hike in the overnight policy rate by a cumulative 100 basis points to 2.75% by Bank Negara in 2022, the property development segment continues to witness encouraging demand for its product offerings, especially the mid-priced range residential units.

The group's strategy is two-pronged: to launch new products with sustained margins as well as a concerted effort to clear completed inventories by leveraging on its "Trusted" brand and promotion campaigns to drive sales.

For the second quarter ended Dec 31, 2022 of financial year 2023 (2Q23), the property developer's revenue was down by 5.13% year-on-year (y-o-y) to RM670.4mil due to the lower performance from the property development segment.

This was in particular with regards to the group's operations in the People's Republic of China that saw stiff competition in the property market within the vicinity.

Net profit for the quarter surged 220% y-o-y to RM402mil or an earnings per share of 7.30 sen due to reversal of inventories previously written down of RM192.7mil, its filing with Bursa Malaysia on Friday noted.

IOIProp's hospitality and leisure segment had a turnaround in 2Q23. This segment's revenue increased by 80% y-o-y to RM55.6mil and posted an operating profit of RM3.9mil in 2Q23 as opposed to an operating loss of RM1.2mil in 2Q22.

IOIProp executive vice-chairman Lee Yeow Seng said the property development segment remains as the group's biggest revenue contributor. This was partially attributable to the higher share of results of joint ventures in the latest quarter of the financial year 2023 (FY23) which included the reversal of inventories previously written down.

"Though uncertainty on the economy lingers, IOIProp continues to forge ahead in all of our business segments, supported by the increase in demand for our wide product offerings and recurring earnings from various matured property investment portfolios, as well as improving prospects for the tourism sector.

"These will provide us with a strong foundation to assure sustained earnings for the group," he told StarBiz.

For the first half of FY23, IOIProp's property division sales totalled RM926.6mil. Local projects contributed RM796.6mil or 86% of the total sales, while its overseas projects in China and Singapore contributed RM130mil, or 14% of the total sales.

The group noted local property sales were largely secured from the Klang Valley area at RM473.4mil. This was led by its integrated development at IOI Resort City in Putrajaya and matured township at Bandar Puteri Puchong in Selangor.

Moreover, the group stated its townships at Bandar Putra Kulai and Taman Kempas Utama in Johor continue to attract buyers, recording sales of RM305.5mil.

"In view of this, we will continue to meet the needs of the market by ensuring cost-effectiveness throughout our developments, allowing for the delivery of competitive mid-priced ranged homes," said chief executive officer Datuk Voon Tin Yow.

IOIProp added China's reopening has led to a renewed interest for property purchase with its IOI Palm City and IOI Palm International Parkhouse developments seeing higher footfall and enquiries.

The group also expects the marketing campaign initiated by the Chinese government in tandem with new financial policies to propel sales of completed projects in Xiamen, China.

Going forward, the group will be undertaking a two-pronged strategy in property launches. IOIProp plans to launch new products with sustained margins and clear inventories by leveraging on its Trusted brand and promotion campaigns to boost sales.

"The launch of ‘101 Happy Moments', our grand and innovative marketing campaign, has transformed our IOI Galleria showrooms into exciting hubs for surrounding communities on top of showcasing our latest developments," said Voon.