PUTRAJAYA: In the conclusion to the demerger exercise being undertaken by IOI Corp Bhd, which will see the separation of IOI Properties Group Bhd from IOI Corp, executive chairman Tan Sri Lee Shin Cheng has appointed his two sons – Datuk Lee Yeow Chor and Lee Yeow Seng – as chief executive officers (CEOs) of IOI Corp and IOI Properties, respectively.

Analysts said their appointments would put both companies on stronger footing and focus.

Meanwhile, Shin Cheng said at a joint press conference and analyst briefing yesterday that he would remain as executive chairman of IOI Corp as well as the soon-to-be-listed IOI Properties.

Newly appointed CEO of IOI Properties, Yeow Seng sees the company achieving RM2.5bil to RM3bil in sales for the financial year (FY) ending June 30, 2015.

With a 4,047ha landbank as well as an increase in its property investment and leisure and hospitality assets, analysts are positive on IOI Properties’ long-term prospects.

Jan 15, 2014 will mark its re-entrance to the Main Market of Bursa Malaysia, interestingly enough, at a time when market sentiment on property development is not sky-high.

Cooling measures introduced during Budget 2014 such as the hike in the real property gains tax and the abolishment of the developers interest-bearing scheme have put a damper on developers and property investors alike.

Analysts said there might be setbacks on the sales momentum in the short term due to these cooling measures.

“IOI Properties is in the right market, namely, Malaysia, Singapore and China. However, all three markets have introduced cooling measures for property and credit growth. Therefore, it is likely there would be setbacks on the sales momentum in the short term,” said an analyst.

Another analyst added that its listing would provide investors with an alternative to S P Setia Bhd, and should attract a good institutional following based on its good fundamentals and size.

Once listed, it is set to have a market capitalisation of at least RM8.31bil, ranking it second to UEM Sunrise Bhd by market value.

IOI Properties would cater to investors looking for a more balanced development portfolio compared with UEM Sunrise, which has most of its projects in Iskandar Malaysia, according to an analyst.

However, he believes that once listed, shares in IOI Properties would be expensive vis-à-vis the market. Nonetheless, its fundamentals will propel it forward in the long term.

Meanwhile, CIMB Research analyst Ivy Ng said: “We expect IOI Properties to do well upon listing and estimate that its share price could rise to RM3.12-RM4.02, representing a 10% to 30% discount to its revised net asset value.”

IOI Properties will be listed by way of in specie distribution and a restricted offer for sale (ROS) involving 3.24 billion shares to shareholders of IOI Corp.

The exercise entails the distribution-in-specie of one IOI Properties share for every three IOI Corp shares, and an ROS of one IOI Properties share for every six IOI Corp shares. An in specie distribution is the distribution of an asset in its present form, rather than selling it and distributing the cash.

Each IOI Properties share is priced at RM1.76 under the ROS, representing a 30% discount to the reference price of RM2.51.

For the FY ended June 30, 2013, the company bagged RM1.7bil in total sales, with the majority contributed by its Malaysian projects.

Yeow Seng added that over the next three years, the company’s estimated gross development value of ongoing and future projects in Malaysia would amount to RM10bil, while in China, it is five billion yuan and S$3bil for its Singapore-based projects.

It intends to add 5.05 million sq ft in net lettable area in future property investment, on top of the current 2.65 million sq ft it already has, by the year 2018.

Meanwhile, in the leisure and hospitality segment, the company expects to have 1,649 hotel rooms by 2018, from 639 rooms currently.

CIMB’s Ng has downgraded her call on IOI Corp to “reduce” as at post-demerger exercise, it is trading at a premium to its target price of RM4.11. However, it will now stand out as one of the most liquid big-cap planters in Malaysia.

Source: http://www.thestar.com.my/Business/Business-News/2014/01/09/Next-generation-at-IOIs-helm/