I-Berhad reported a strong RM26.9m in headline net profit for FY22 (+>100% YoY), though colored by ~RM23.0m in one-off gains and RM4.4m in revaluation losses. Excluding these, estimated core net profit of RM8.2m is slightly behind our estimates at 83% of full-year expectations, though we are encouraged to see some momentum building through the stronger recognition of sales from an ongoing project, and inventories. We leave F23/FY24 estimates unchanged while also introducing FY25 numbers. Scope for upside is still attractive with ~60% of its gross development value yet to be realized, timing notwithstanding. While we still like I-Berhad’s long-term value proposition, we retain our Neutral call as we look towards further earnings consistency. Our target price is unchanged at RM0.26 (based on a significant 80% discount to RNAV and ~60% discount to book value).

• FY22 earnings overview. The property development segment recorded revenue of RM41.9m (-12.0% YoY), weaker YoY due to the completion and delivery of its Hill10 residences in 2021, though the current 4QFY22 quarter (going into 2023/24) will see stronger sales recognition of its new BeCentral development. Segment pretax profit of RM12.5m (+>100% YoY) is mainly due to the one-off RM15.1m re-measurement gain. Unbilled sales continue to build meanwhile, currently at RM87.3m as at end-Dec (Sep 2022: RM73.6m).
  
  The property investment segment reported higher revenue of RM19.1m (+129.7% YoY) due to higher occupancy in its corporate office tower, Mercu Maybank, with segment pretax profit of RM14.8m (+>100% YoY) helped by a revaluation surplus of an associate’s investment property, though marred by net valuation losses on its own investment properties.
  
  The leisure segment saw a notable jump in revenue contribution (+154.7 YoY) to RM53.8m following the opening of the Double Tree Hilton hotel, though the quarter in question also coincides with the seasonal year-end holiday. Start-up costs (equipment, etc) for the hotel dragged the segment into a pretax loss of RM1.1m however.

• Business overview. The Group will continue to generate sales from its ongoing BeCentral residences, a project comprising two residential towers with a gross development value (GDV) of RM600m, in addition to corporate/retail spaces in the vicinity (named Twenty8 and 8Premier). The recent launch of BeCentral’s Tower 1 with about 40% of its 474 units sold to-date validates the draw of the location in benefitting from the urbanization of the outer Klang Valley region (Shah Alam/Klang) despite the challenging market conditions

Source: PublicInvest Research - 1 Mar 2023