IOI Properties upbeat on FY16 earnings

Posted:
Source: The Sun

PUTRAJAYA: IOI Properties Group Bhd is optimistic of maintaining its profit for the financial year ending June 30, 2016 (FY16) on the back of slightly higher sales projection of RM2 billion amid the slowing property market.

This compares with the RM1.9 billion sales it achieved for FY15.

At a press conference after the company’s AGM here yesterday, chairman Tan Sri Lee Shin Cheng said earnings will be supported by its multiple local and overseas projects, including those in China and Singapore.

“With that, we still can maintain our profits,” he noted.

IOI Properties reported a flat net profit of RM890.7 million for FY15 compared with RM889.92 million, a year ago.

Lee said the RM2 billion sales target will be contributed by several new launches, including a new township in Kota Warisan, which will be launched next week. Besides that, it also launched the “Le Pavillion” serviced apartment project in Bandar Puteri, Puchong, last weekend.

While Lee acknowledged that there could be oversupply for high rise properties, he said the landed properties segment is still robust. He believes the property market has come to the tail-end of the current low cycle and it should rebound in the first quarter of 2016.

Nevertheless, Lee is calling for the Selangor government to relax the regulation of restricting foreigners to buy properties priced below RM2 million, in order to help revive the property market.

“We hope they (the state government) relax this to RM1 million. We want foreign buyers to come in especially with the weakening of the ringgit. This could enhance the value of the ringgit,” he said.

On the recent announced land buy within the IOI Resort City, Lee said 24% of the land had received development order, meaning the development can take off any time.

“It can be launched immediately and the revenue will straight away come in,” he said, noting that the land has been converted into commercial and residential from agricultural land.

However, he said the land acquisition is still subject to shareholders’ approval at an upcoming EGM, expected to be held early January next year.

Recall that IOI Properties announced this month that it had proposed to buy a piece of land measuring 399.7 acres for RM1.58 billion from Lee and his wife Puan Sri Hoong May Kuan.

“If this is not my related company and I am not the major shareholder, I would not sell this piece of land to a third party.

“I want to enhance my shareholding in this company to show that I am very confident of the future growth of this company,” Lee stressed.

As the acquisition sum will be satisfied via 30% in cash and 70% in the issuance of new shares at RM2.21 each, this will see the Lee family’s holdings in IOI Properties increase from 51% to 58%.

The company is planning a project worth RM20 billion in gross development value on that piece of land, including the construction of the second phase of IOI City Mall, which will start after an expected 100% occupancy rate is achieved for the first phase by the first half of next year.

Currently IOI City Mall’s occupancy rate stands at 92%. For the remaining 8%, he said, 5% has been taken up and renovation works are under way.

During this challenging period for the property market, Lee said he sees more landbanking opportunities for IOI Properties as some property firms may be looking to sell their landbank to unlock their value.