IOI Properties makes impressive comeback

KUALA LUMPUR: IOI Properties Group Bhd made an impressive start to its comeback on Bursa Malaysia yesterday in the first initial public offering (IPO) of this year, even overtaking the country’s largest property developer, UEM Sunrise Bhd, by market capitalisations at one point.

Shares in IOI Properties opened with a premium of 40% to their reference price of RM2.51, hitting a market cap of RM10.4 billion. This was higher than UEM Sunrise’s market cap of RM10.39 billion when the counter opened at RM2.29.

IOI Properties hit an intra-day high of RM3.56 before retreating to end the day lower at RM3.15, still up 64 sen or 25.5%, with 66.1 million shares traded.

Kenanga Research, which is initiating its coverage on IOI Properties with an “outperform” rating and RM3.68 price target, said the developer has a deep value in terms of its gross development value (GDV)/market cap ratio of 12.6 times versus 9.3 times of the big-cap peers.

“We estimate a total GDV of RM100 billion for IOI Properties, which puts it on par with S P Setia Bhd and 28% higher than UEM Sunrise. This implies a GDV/market cap ratio of 12.6 times, just trailing behind S P Setia which has the best ratio of 14.3 times but more than its big-cap peers’ average of 9.3 times,” it said in a report yesterday.

At the listing ceremony, IOI Properties’ newly appointed chief executive officer Lee Yeow Seng said the IPO was meant to benefit IOI Corp Bhd shareholders who have supported the group over the years.

“The way the IPO was structured was mainly to benefit our shareholders who have been with us for many years,” he told reporters yesterday.

With the opening price at RM3.21, IOI Corp executive chairman Tan Sri Lee Shin Cheng sees some of the group’s larger shareholders realising their gains.

IOI Properties’ most recent developments included IOI Resort City in Putrajaya, the South Beach development in Singapore and IOI Palm City in Xiamen, China, which are expected to bring in a combined GDV of RM10.7 billion upon completion in the next three years.

“We are also in the midst of building a shopping mall with a net lettable area of 1.5 million sq ft, two office towers with 30 storeys and a five-star hotel to complement the development of IOI Resort City,” said Shin Cheng.

“IOI Properties is heading to increase its asset management portfolio in the coming years. The gross profit from the investment properties segment is expected to grow by 70% to RM120 million in the next three years.”

IMPRESSIVE COMEBACK... IOI Properties Group Bhd executive chairman Tan Sri Lee Shin Cheng (second from left) and his son chief executive officer Lee Yeow Seng (third from left) looking at the share price screen after the listing ceremony

This article first appeared in The Edge Financial Daily, on January 16, 2014.