IOI Properties' 1Q net profit rises 14% year-on-year

Source: The Edge Markets

KUALA LUMPUR: IOI Properties Group Bhd reported a net profit of RM115.48 million or 3.07 sen per share for the first quarter ended Sept 30, 2015 (1QFY16), up 14% from RM101 million or 3.08 sen per share a year earlier.

The better net profit for the quarter was on the back of a 59% jump in revenue to RM595.26 million, from RM375.52 million in the previous year.

In a statement to the exchange, the company said its three segments — namely property development, property investment, and leisure, hospitality and other operations — had all performed better during the quarter.

Its property development segment saw a 41% increase in operating profit to RM174.7 million, due to higher sales take-up rate in its Singapore-based Trilinq project, its maiden residential projects in IOI Palm City, Xiamen, China, and steady increase in progress works from ongoing development projects.

Its property investment division posted operating profit of RM29.8 million, soaring 74% from the previous year, driven by growth in the retail segment.

Meanwhile, its leisure, hospitality and other operations also saw improved performance, contributed by Fourpoint by Sheraton in Puchong and its amusement park District 21 and Icescape Ice Rink at IOI City Mall.

Going forward, the company expects a challenging operating environment in the near term, as the local property market remains slow.

"The domestic property market sentiments remained relatively subdued as the industry continues to experience slower overall take-up rate at new property launches. This is mainly attributed to cautious consumer spending and tighter lending policies.

"The operating environment in the short term is expected to be challenging," it said.

However, the company said its medium- and long-term prospects remain attractive, supported by the young demographic and the demand for strategically located products.

"For FY16, the group is adopting strategies to target genuine buyers with quality affordably-priced landed and high-rise residences as well as commercial shop offices in strategic locations. These segment markets are expected to be resilient in the current economic situation," said IOI Properties.

Meanwhile, its overseas projects in China and Singapore are expected to contribute positively, as the second phase of its residential properties in IOI Palm City are slated to be launched in 2QFY16, while its Trilinq project is expected to see better take-up rate as the project progresses.

For the property investment segment, the company expects healthy occupancies and rental yields due to the strategic location of its retail, hospitality and office developments.

"Barring any unforeseen circumstances, the group's performance is expected to be satisfactory," it said.

IOI Properties closed unchanged at RM2.09, with a market capitalisation of RM7.87 billion.