Results

• Within Expectations: Reported 1HFY15 PATAMI of RM310.8m which accounted for 79.7% and 63.7% of ours (in line) and consensus (below) full year earnings forecast, respectively.

• Although 9M usually accounts for approximately 73% of full year forecasts, we deemed this to be in-line in view of the challenging times ahead for the sector, coupled with expected slowdown post-GST implementation.

Deviations

• None.

Dividends

• None.

Highlights

• YTD: Revenue grew 24.6% yoy on the back of increased revenues under all its business segments. Bottomline on the other hand declined marginally by 2.2% due to one-off fai r value gain in 2QFY14 and 2QFY15 of RM198.0m and RM178.3m, respectively. Stripping it off, PATAMI shows a growth of 2.8% yoy.

• We gathered that the RM370.2m property development revenue during the quarter largely came from Malaysian properties (90%), while China and Singapore contributed 1% and 9%, respectively.

• We believe revenue during the quarter was largely contributed by Bandar Puteri Bangi that was launched in February. GDV launched was RM400m and take up rate is at 80% currently.

• For upcoming launches, we understand that IOIPG is looking to launch Xiamen 2 in end-May with potential GDV of RMB1.5b (ci rca RM800m). Other launches would be from its existing projects and remaining launched from its Bangi township.

• IOIPG remained focused in launching affordable housing and landed properties in its existing and new townships in Klang Valley and Johor. We understand that to date, the group have clocked in new sales of close to RM1bn.

• Unbilled sales YTD stood at RM1.5bn, representing 1.2x of FY14’s 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

• Unchanged.

Rating

HOLD

• Posi tives: 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

TP remained unchanged at RM2.27 based on unchanged 35% discount to RNAV. Our TP of RM2.27 valued IOIPG at 18.9x FY15 P/E. Maintain HOLD.

Source: Hong Leong Investment Bank Research - 15 May 2015