IOI Properties 2QFY15 profit drops 6.6% on higher marketing expenses
Source: The Edge Markets
KUALA LUMPUR (Feb 13): IOI Properties Group Bhd's net profit for the second quarter ended Dec 31, 2014 (2QFY15) has declined 6.6% to RM280.35 million, on higher related marketing and selling expenses.
However, the group has recorded a higher revenue for 2QFY15, from RM392.62million to RM448.26 million — an increase of 14.17%.
IOI Properties (fundamental: 1.75; valuation: 1.8) said revenue from property development contributed approximately 83% of its revenue, that is RM26.2 million or 8% higher than the preceding year's corresponding quarter.
The remaining 17% of its revenue was contributed from property investment, leisure & hospitality and other operations.
“The increase in revenue from both property investment, leisure & hospitality and other operations, is mainly due to higher income generated from assets acquired from the internal restructuring exercise that was completed on Dec 5, 2013, prior to the listing of the company,” it said.
The property developer added that its overall operating profit of RM348.9 million in the current quarter, had included a fair value gain of RM178.3 million on the completion of IOI City Mall.
“The group's operating profit of RM170.6 million (after excluding fair value gain on investment properties of RM178.3 million) in the current quarter, is slightly lower than the preceding year['s] corresponding quarter of RM170.8 million (after excluding one off gain on acquisition of subsidiaries of RM198.0 million). The decrease in operating profit is mainly on higher related marketing and selling expenses,” it said.
For the six months, its profit went down 13.57% to RM381.35 million, despite revenue having increased by 22.68% to RM823.78 million.
IOI Properties said the Malaysian property market remains challenging, with the banks' credit tightening measures, volatile economy and the impending introduction of Goods and Services Tax ("GST").
Moving forward, the group will continue to focus on affordable housing and landed properties in its existing and new townships in Klang Valley and Johor.
"The group is also expected to generate higher income stream from the investment property segment, with the successful opening of IOI City Mall in November 2014. Despite the challenging market condition, the overall group's performance is expected to be satisfactory,” it added.
IOI Properties closed unchanged at RM2.07, giving it a market capitalisation of RM7.82 billion.