Results

Core 4Q14 net profit increased 20.9% qoq to RM107.8m, and core FY14 net profit of RM411.5m made up 82% and 79% of HLIB and consensus estimates respectively.

Deviations

Mainly arising from the property investment and leisure/hospitality segments. We note that our forecast for the main property development division was broadly in-line.

Dividends

8 sen first and final dividend was declared in 4Q14, significantly above our 3.9 sen DPS forecast.

Highlights

Property development the main earnings contributor. IOIPG reported operating profit of RM597m in FY14, with property development and property investment contributing 83% and 9% respectively.

Property development segment. The main earnings contributors were its development projects in Malaysia (Klang Valley and Johor) and in Xiamen, China.

Property investment segment. The main earnings contributors were IOI Mall @ Puchong, IOI Boulevard @ Puchong and One & Two IOI Square.

Leisure & hospitality segment. The main earnings contributors were Putrajaya Mariott Hotel and Palm Garden Hotel.

Healthy earnings visibility, with unbilled sales sustained at RM1.5bn (1.2x FY14 property development revenue).

Risks

Has 28% exposure to China and Singapore in terms of GDV, making it sensitive to any external slowdown and forex fluctuations.

Forecasts

After rolling over our numbers, our FY15-16E forecasts are reduced by 4.6%.

Rating

BUY

Positives: highly liquid proxy to property sector; large war-chest for landbank acquisitions; has exposure to Singapore and China property markets; enjoys vast and cheap landbank.

Negatives: Could face sector headwinds in Malaysia, while the Singapore and China property markets are also currently at the low point of their cycles.

Valuation

After rolling over our numbers, our TP is increased from RM3.78 to RM3.94 (10% discount to RNAV), which values IOIP at 17.3x P/E for CY15, vs 18.7x FY15E P/E which UEM Sunrise is currently trading at.

We maintain our BUY call as we anticipate strong rerating for IOIPG when the Singapore and China markets come into their upcycles.

Source: Hong Leong Investment Bank Research - 26 Aug 2014