IGB Corp hopes to maintain profit performance

KUALA LUMPUR (May 24): IGB Corp Bhd, which saw a big jump in first-quarter (1Q) net profit, hopes to achieve full-year earnings that are on a par with the previous year by leveraging on its diversified portfolio of property assets.

The group’s net profit for the year ended Dec 31, 2016 (FY16) was RM297.99 million, up 37.4% compared with RM216.9 million for FY15. Revenue was down by a marginal 1.4% to RM1.15 billion from RM1.17 billion.

“Barring any unforeseen circumstances, our outlook for FY17 looks [stable],” its managing director Datuk Seri Robert Tan told reporters after the group’s annual general meeting yesterday.

“Our business is quite diversified. We have hospitality, commercial and retail [properties in our portfolio]; that diversification helps to keep us afloat [through the challenging environment],” he added.

For 1QFY17, IGB Corp’s net profit soared 122% to RM115.25 million from RM51.81 million a year earlier. This, however, was mainly helped by the inclusion of a one-off gain of RM34.3 million from sale of assets by a subsidiary.

The higher quarterly net profit, according to the group, was also due to higher contributions from the group’s property investment divisions, along with better earnings from its hotel business. Quarterly revenue dropped 9% to RM254.78 million, from RM280.21 million a year earlier.

Tan said the group hopes to diversify further, including abroad, particularly with its upcoming mixed development project in the UK undertaken jointly with US-based Tower Ray Ltd.

The project, which will carry a gross development value of about £1.5 billion (RM8.37 billion), is located on a two-acre (0.81ha) plot of land in Blackfriars, London.

“The Blackfriars project will be a mixed development, comprising a hotel as well as residential, commercial and retail units,” said Tan.

“We hope to obtain the necessary planning permissions [to begin construction of the project] by next month and target [for] construction to be completed within 36 months [from then],” he added.

Tan said the group expects to see contributions from the Blackfriars project by the middle of 2019.

Meanwhile, he said work is ongoing for IGB Corp’s joint venture with Southkey City Sdn Bhd to develop the Mid Valley Southkey Megamall in Johor Bahru. The group hopes to open the mall by August 2018.

“So far, the leasing response for the Southkey mall has been encouraging, with roughly about 60% of [our existing tenants] showing interest in renting a space,” Tan said, adding that the mall has a net lettable area of 1.5 million sq ft.

“We hope for profit to come in [for the Southkey mall] as soon as possible, hopefully within the first year [of opening],” Tan said.

IGB Corp shares closed unchanged at RM2.95 yesterday, giving a market capitalisation of RM3.94 billion.

This article first appeared in The Edge Financial Daily, on May 24, 2017.

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