Investment fair value loss pulls down IOI Properties 2Q net profit

KUALA LUMPUR (Feb 28): IOI Properties Group Bhd’s net profit for the second quarter ended Dec 31, 2021 (2QFY22) fell 26.5% to RM125.72 million from RM170.98 million a year ago, due to fair value loss of IOI Mall, Xiamen, amounting to RM98.4 million.

This resulted in lower earnings per share of 2.29 sen for 2QFY22 compared with 3.1 sen for 2QFY21, according to the group’s filing.

“Excluding fair value loss of an investment property of RM98.4 million, the group’s underlying profit before taxation (PBT) of RM331.3 million for the current year quarter is RM58.5 million or 21% higher than the preceding year corresponding quarter of RM272.8 million,” the group noted.

Meanwhile, quarterly revenue grew 19.2% to RM704.83 million from RM591.34 million a year earlier, on the back of higher revenue contribution from all its business segments.

The property development segment generated revenue of RM571.6 million in 2QFY22 up 15% from RM494.9 million in 2QFY21, mainly due to higher sales contributions from its Malaysian operation as a result of the extension of the Home Ownership Campaign till Dec 31, 2021.

Likewise, its property investment segment revenue also increased 31% to RM96.7 million from RM73.6 million in 2QFY21, which the group attributed to growth momentum after the Movement Control Order was lifted which resulted in lower rental relief assistance to tenants, as well as the commencement of recurring leasing income from IOI Mall, Xiamen.

As for its hospitality and leisure segment, quarterly revenue rose 57% to RM33.1 million from RM21.1 million in 2QFY21, mainly attributed to higher room occupancy rate and patronage at its hotel’s food and beverage outlets following the removal of movement restrictions to interstate travel and dine-in at eateries.

Compared to the immediate preceding quarter, net profit fell almost 40% from RM208.81 million in 1QFY22 due to the aforementioned fair value loss of an investment property, while revenue jumped 63.2% from RM431.77 million mainly due to the higher contribution from all business segments.

For the six-month period, the group’s net profit dropped 7.86% to RM334.54 million versus RM363.08 million in the previous corresponding period last year.

Its six-month revenue also fell 9.15% to RM1.14 billion from RM1.25 billion a year prior, mainly due to lower revenue contribution from its operations in China.

Amid significant headwinds arising from the emergence of the Omicron Covid-19 variant, persistent supply-chain disruptions, labour market challenges and rising inflationary pressures, IOI Properties said it expects the operating environment to remain challenging.

“Nevertheless, the group will continue with our prudent and professional management approach to ensure delivery of satisfactory performance in the coming quarters whilst improving our market position and strengthening our competitive edge to seize any opportunities that may emerge,” it added.

IOI Properties shares gained one sen to close at RM1.06, giving it a market capitalisation of RM5.84 billion.

Edited by Kathy Fong

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