FOLLOWING a stellar third-quarter earnings performance, property developer IOI Properties Group Bhd is confident it can meet, if not surpass, its sales target for the current financial year.
Group chief executive officer Datuk Voon Tin Yow (pic) says the group will be riding on the extension of the Home Ownership Campaign (HOC) and will be aggressively driving sales via its own marketing initiatives.
“Our sales target is slightly over RM2bil and the group is on track to meet, if not surpass, it by the end of our current financial year, ” he tells StarBizWeek.
IOI Properties’ net profit for its third quarter ended March 31, 2021, rose two-fold to RM178.75mil from RM82.36mil in the previous corresponding period, driven by better performance of the group’s property development segment.
Revenue in the third quarter increased to RM578.95mil from RM401.43mil a year earlier.
In its notes accompanying its third quarter financial results, IOI Properties said its property development segment recorded revenue and operating profit of RM485.2mil and RM182.3mil, respectively, during the quarter under review.
“The recorded result is higher than the preceding year’s corresponding quarter by RM201.1mil or 71% and RM96.7mil or 113%, respectively.
“Better financial performance in the current quarter is mainly attributable to higher sales contribution from both Malaysia and China, as well as advanced progress work from ongoing residential development in China.”
For the nine-month period ended March 31, 2021, IOI Properties’ net profit grew to RM541.84mil from RM460.63mil in the previous corresponding period, while revenue grew to RM1.83bil from RM1.51bil a year earlier.
Voon says IOI properties expects to deliver satisfactory financial performance in its fourth quarter, with contribution from the property development segment in both Malaysia and overseas operations primarily from unbilled sales achieved to date.
“For the property investment and hospitality and leisure segments, the financial performance is expected to be further dampened amid the lockdown.”
He adds that IOI Properties does not intend to launch any new projects in the final quarter of its current financial year.
“The group’s dynamic marketing campaigns have thus far garnered favourable response from the public and with the HOC, it has enhanced our ability to attract even more interests among would-be homeowners, ” Voon says.
Moving forward, the group will continue with its IOImyHome campaign, which Voon says has managed to address the challenges of affordability and the inability to get financing faced by prospective buyers.
“With the extension of the HOC until the end of 2021, prospective buyers will be expected to take advantage of the group’s IOImyHome campaign and the benefits offered by the HOC, ” he says.
The HOC was initially kicked off in January 2019 to address the overhang problem in the country. The campaign, which was initially intended for six months, was extended for a full year.
It proved successful, having generated sales totalling RM23.2bil in 2019, surpassing the government’s initial target of RM17bil.
The government reintroduced the HOC in June last year under the Penjana package to boost the property market after it was adversely affected by the Covid-19 pandemic.
In March this year, during the Real Estate and Housing Developers’ Association’s briefing on the property market for 2021, its president Datuk Soam Heng Choon revealed that since the HOC was reintroduced last June, a total of 34, 354 residential units valued at RM25.65bil had been sold as at Feb 28, 2021.
On the outlook of the property sector for the remainder of 2021, Voon says the operating environment is expected to remain challenging and uncertain with the prolonged pandemic for the remainder of 2021.
“The government has imposed the lockdown throughout most of June 2021 to curb the recent spike of Covid-19 cases, which has curtailed the resumption of economic activities and disrupted the momentum of the property market recovery in the country.
“Nevertheless, IOI Properties expects the national Covid-19 immunisation programme to continue to be rolled out smoothly with the daily vaccination rate progressively ramped up, as the government has expressed confidence of administering over 300, 000 doses of vaccination jabs daily in the coming months.”
Voon says IOI Properties remains optimistic that the rollout of the immunisation programme will eventually keep the pandemic under control, which he believes will then improve consumer sentiment and spur economic recovery.
“Barring any unforeseen circumstances affecting the country’s target to achieve herd immunity by year-end, relaxation of travel restrictions will be expected.
“Coupled with pent-up interests among consumers owing to a prolonged suppressed market sentiment, the group believes this will stimulate an increase in economic activities, leading to a strong rebound in the property industry, ” he says.
Meanwhile, TA Securities in a recent report says it is revising upwards its sales and progress billings for IOI Properties, particularly for the group’s China projects.
“Consequently, 2021, 2022 and 2023 earnings are raised by 7%, 4% and 6%, respectively, along with higher property sales assumptions of RM2bil, RM2.2bil and RM2.4bil, respectively.”
The research house adds that IOI Properties’ overseas operations are on a steady path to recovery.
“Its China operations registered brisk sales in the past four quarters, thanks to pent-up demand following China’s recovery from the Covid-19 pandemic.
“The construction of its property investment portfolios in China is also progressing well.”
TA Securities points out that IOI Palm City Mall, Xiamen, has secured a high level of occupancy, adding that the mall business is expected to commence by the third quarter of 2021.
“Over in Singapore, the construction of the Central Boulevard development has picked up speed. Leasing activities have commenced and received strong response from the market.”