The Group reported an improved 4QFY21 net profit of RM5.3m (+>100% YoY, +61.8% QoQ) on the back of a notable turnaround in the performance of the Leisure segment, post-MCO 3.0. Despite numerous operating challenges faced, the Group managed to remain profitable in FY21 with a net profit of RM369,000 recorded, helped in part by fair value gains. The earnings only make up 10% of our full-year estimates however. That said, we keep forward estimates unchanged on expectation of a stronger recovery in its overall performance in the year ahead, with all 3 key segments seeing traction in its recovery momentum. We like I-Berhad’s long-term value proposition underpinned by a remaining ~60% of its gross development value yet to be realized, though we retain our Neutral call in the absence of near-term re rating catalysts Our target price is unchanged at RM0.26 (based on a steep 80% discount to fully-diluted RNAV).

• 4QFY21 earnings overview. The property development segment recorded revenue of RM13.1m for the quarter, recognized mainly from the completion of the Hill10 residence project as well as recognition of sales of its latest development BeCentral. A pretax loss of RM8.5m was reported however, largely due to the early construction stages of the BeCentral development. Unbilled sales are a healthier RM39.3m as at end-Dec (Sep 2021: RM32.9m), an encouraging sight. The property investment segment reported a pretax profit of RM11.2m due in large part to a revaluation surplus. The Group’s leisure segment roared back into action post lockdown meanwhile, with revenue and pretax profit of RM11.8m and RM3.8m reported respectively for the quarter.

• Business overview. The Group has had a rough two years (2020/2021), though all signs are pointing toward a more promising FY22 and beyond. The Maybank Group has been secured as an anchor tenant for its Grade A office tower. Together with an insurance company, various multinational companies and an international logistics company, occupancy is now at 80%, a significant development considering that the building has only been in operation for a year. Footfall to the Central i-City mall has also picked up, with tenancy rate at 85%, as we are made to understand. While the Group has not officially launched its BeCentral luxury development, sales are already being recognized, also reflected in its rising unbilled sales amount. The DoubleTree by Hilton which is slated to open its doors mid- 2022 will contribute further to its property investment portfolio.
  While financial impact is not exactly quantifiable at this juncture, the Group’s recent announcements of tie-ups with Huawei and China Mobile is positive, and solidifies its deeper push into the technological sphere which is a defining factor for the Group’s developments.

Source: PublicInvest Research - 28 Feb 2022