Share
Below Expection
Highlight
• Valuation: We are recommending Outperform with our target price at RM2.00 pegged to forward PER of 16X and EPS of 12.6sen.
• 1QFY10 top line plummeted by 6.1% q/q to RM156.1mn: Revenue dropped due to lower contribution from property development and hotel. In 1QFY10, revenue from property development fell by 51.5%q/q could be attributed to fewer launches over the years to replenish its diminishing unbilled sales. Hotel revenue fell by 9.8%q/q.
• PBT grew by 8% to RM58.3mny/y despite 6% drop in top line: Improvement in PBT margin by 14.5%y/y was due to: (1) contribution from the Property Investment division which grew by 15.5% y/y in operating margin; and (2) increased contribution from associates companies.
• Plan to acquire Hotel Overseas: IGB enjoys 50% of its profit from hotel operations . Thus, they are looking into expanding their business overseas, namely into Japan, China and Indochina by acquiring existing hotels which are located within city centres.
We believe IGB has the technical expertise and experience to run overseas hotel operations , since they are now managing a hotel in UK and several local hotels that includes Cititel Hotel Chains, Micasa All Suites, The Gardens Hotel, The Boulevard Hotel and the Pangkor Island Beach Resort.
A new 3 star hotel in Makati, Philippines will come into operation within the next three weeks further expanding their presence in overseas market.
• No new launches: IGB intends to focus on property investment moving forward. Thus, no new projects are expected to be launched in 2010, despite several property development was submitted for authorities approval. Mid Valley City Phase 3 which was put on hold in 2009 would be revived as a commercial development with GDV of RM500mn in line with their strategy to focus on property investment segment.
Highlight
• Valuation: We are recommending Outperform with our target price at RM2.00 pegged to forward PER of 16X and EPS of 12.6sen.
• 1QFY10 top line plummeted by 6.1% q/q to RM156.1mn: Revenue dropped due to lower contribution from property development and hotel. In 1QFY10, revenue from property development fell by 51.5%q/q could be attributed to fewer launches over the years to replenish its diminishing unbilled sales. Hotel revenue fell by 9.8%q/q.
• PBT grew by 8% to RM58.3mny/y despite 6% drop in top line: Improvement in PBT margin by 14.5%y/y was due to: (1) contribution from the Property Investment division which grew by 15.5% y/y in operating margin; and (2) increased contribution from associates companies.
• Plan to acquire Hotel Overseas: IGB enjoys 50% of its profit from hotel operations . Thus, they are looking into expanding their business overseas, namely into Japan, China and Indochina by acquiring existing hotels which are located within city centres.
We believe IGB has the technical expertise and experience to run overseas hotel operations , since they are now managing a hotel in UK and several local hotels that includes Cititel Hotel Chains, Micasa All Suites, The Gardens Hotel, The Boulevard Hotel and the Pangkor Island Beach Resort.
A new 3 star hotel in Makati, Philippines will come into operation within the next three weeks further expanding their presence in overseas market.
• No new launches: IGB intends to focus on property investment moving forward. Thus, no new projects are expected to be launched in 2010, despite several property development was submitted for authorities approval. Mid Valley City Phase 3 which was put on hold in 2009 would be revived as a commercial development with GDV of RM500mn in line with their strategy to focus on property investment segment.
SHARE
