Below expectations: 1HFY18 core PATAMI came in at RM363.3m, accounting for 39% and 39.2% of ours and consensus full year estimates, respectively.
Deviations
Slower-than-expected launches and progressive billings.
Dividends
Nil.
Highlights
QoQ: Revenue decreased 18.7% due to the completion of Trilinq project in Singapore back in FY17. Core PATAMI was down by 14.1% in tandem with lower revenue after excluding the impairment loss of RM79.7m due to revaluation.
YoY: 2QFY18 core PATAMI down by 31.2% given the significant lower profit contribution from development projects in Malaysia and China as well as lesser units remaining for sale in Trilinq.
YTD: 1HFY18 core PATAMI was down by 14.5% due to lower contribution from property development in both Singapore and Xiamen, partially cushioned by higher contribution from property investment division.
New property sales in 1HFY18 achieved RM1.1bn (2Q18: RM448m), on course to achieve full year target of RM2.8bn. Unbilled sales improved to RM1.3bn (from RM930m in 1QFY18), representing a cover ratio of only 0.34x.
We are expecting a stronger 2H18 with Rmb2bn worth of GDV from Xiamen 2 that is expected to launch towards the end of FY18, a booster to earnings.
Domestically, focus will be in Klang Valley with more projects to be rolled out in its growing township in Bandar Puchong (Cruise Residences, GDV: RM300m), Bandar Puteri Bangi (The Strata Townhuse, GDV: RM150m), Bandar Puteri Kota Warisan (Ayden Townhouse & Service Apartment, GDV: RM420m), Sierra 10 (Service Apartments, GDV: RM110m) and others.
Forecasts
FY18/19 earnings are cut by 5.3% and 0.1%, respectively as we delay our launch assumptions.
Rating
BUY ↔, TP: RM2.50 ↓
IOIPG is a value stock with huge land bank and investment properties on the back of attractive book value at 0.6x (industry average of 1.0x), reinforced by the improved take- up rates for its projects and its strong track record.
Valuation
TP is reduced to RM2.50 (from RM2.54) based on unchanged 35% discount to RNAV of RM3.84.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....