1HFY22 CNP of RM343m came within expectations at 54%/49% of our/consensus full-year estimates. 1HFY22 property sales of RM896m are in line with our RM1.9b target (at 47%) backed by YTD launches worth RM1.1b. Keep earnings estimates post results. Maintain OP on unchanged TP of RM1.32 based on 0.38x Fwd. PBV pegged to 1.0SD below 5-year mean.

Within expectations. 2QFY22 CNP of RM219m* led 1HFY22 CNP to RM343m – well within our/consensus estimates at 54%/49% respectively. No dividends as expected – IOIPG only dishes out one final dividend in 4QFY.

*derived CNP after reversing out of fair value loss of RM93m.

Sales also in line. 2QFY22 sales of RM601m (Malaysia: RM394m; China: RM207m) led 1HFY22 sales to RM896m (Malaysia: RM591m; China: RM305m) - also in line with our RM1.9b target at 47%. Such sales quantum is backed by RM1.097b of launches (Malaysia RM185m; China RM912m). As of Dec 2021, unbilled sales stood at RM787m.

Highlights. QoQ, 2QFY22 CNP of RM219m surged 77% on higher revenue (+63%) from improved construction progress and higher quarterly sales of RM601m vs. RM295m thanks to the absence of lockdowns as suffered in the previous quarter. YoY, 1HFY22 CNP of RM343m improved 7% mainly due to better JV contributions (+111%) from improved sales derived from their completed Singaporean developments i.e. South Beach Residence and Seascape.

Earnings continuity post China GDV will come from Singapore. Remaining GDV in China of CNY1.472b (Xia Men 2: CNY372m; Xia Men 3: CNY1.1b) should be depleted within the next 1.5-2 years. Nonetheless, IOIPG’s recent land acquisition worth RM4.68b (SGD1.508b) at Marina View in Singapore (tentative GDV of SGD2.7- 3.0b by our estimates) should bring sustenance to the groups’ earnings. Note, the Marina View acquisition was completed in Dec 2021. Consequently, IOIPG’s net gearing leapt to 0.72x in 4QFY21 (from 0.47x in 3QFY21).

Earnings forecasts. Keep FY22E/FY23E earnings post results backed by unchanged sales target of RM1.9b.

Maintain OUTPERFORM with an unchanged TP of RM1.32 based on 0.38x Fwd. PBV pegged to 1.0SD below 5-year mean. We like IOIPG for its sector-leading margins from its cheap land banks, and recurring income from its stable assets provides good earnings visibility. In the near future, incoming assets which would further strengthen their recurring income include Xia Men 3 Office (aka Signature Office), IOI City Mall Phase 2 and City Boulevard Towers (Singapore).

Risks to our call include: (i) weaker-than-expected property sales, (ii) margin compressions, and (iii) unfavourable changes in real estate policies/lending environments.

Source: Kenanga Research - 28 Feb 2022