• FY17 earnings beat expectations

• Ended FY17 on a strong note

• Encouraging new sales of RM2.85b in FY17

• Maintain Buy with unchanged TP of RM2.41

FY17 earnings beat expectations. IOI Properties Group Berhad (IOIPG) FY17 core net income of RM1.045b was above expectations, meeting 122% and 118% of our and consensus full year estimates respectively. The positive deviation is due to the higher-than-expected earnings contribution from Singapore project which was completed in 4QFY17. Dividend of 6sen per share was announced.

Ended FY17 on a strong note. Core net income for FY17 increased 29%yoy to RM1.045b, driven by growing earnings from property and property investment division. Operating profit of property division improved by 30%yoy, boosted mainly by Trilinq project in Singpore which was completed in the 4QFY17. Meanwhile, core operating profit of property investment division climbed 20%yoy due to higher contribution from IOI City Mall and office properties. Note that we have excluded one-off property, plant and equipment write off of RM43.3m in our core operating profit calculation. On the other hand, 4QFY17 unbilled sales stood at RM1.02b (declined from 3QFY17’s RM1.49b), providing less than one year earnings visibility to property development division.

Encouraging new sales of RM2.85b in FY17. IOIPG registered new property sales of RM659m in 4QFY17 (3QFY17 new sales: RM662m), bringing total new sales to RM2.85b (+28.5%yoy) in FY17. The new sales of RM2.85 is slightly ahead of our new sales target of RM2.6b due to strong property sales in Singapore. 46% of the new sales were contributed by Singapore project, 39% contributed by local projects, while the remaining 15% contributed by project in China. Looking ahead, new property launches for FY18 will be mainly its local projects and project in China.

Maintain Buy with unchanged TP of RM2.41. We maintain our earnings forecast for FY18 as we expect earnings to normalize in FY18. We also introduce our earnings forecast for FY19. Our TP is unchanged at RM2.41, based on 40% discount to fully-diluted RNAV. We see improving prospect for IOIPG’s property development in Singapore following the establishment of JV with Hongkong Land to develop its land at Central Boulevard.

Source: MIDF Research - 29 Aug 2017