KUALA LUMPUR: IOI Properties Group Bhd (IOIPG) is set to achieve its sales target of RM2.3bil for its financial year ending June 30, 2022, underpinned by more than RM1bil worth of new launches and inventory clearance.
TA Securities in a report yesterday noted that pent-up demand for properties following China’s recovery from the Covid-19 pandemic, as well as favourable housing policies locally had driven IOIPG’s new property sales to RM2.3bil in 2021.
This, TA Securities said, exceeded both the research house’s and management’s expectations of RM1.9bil.
“For 2022, management is expecting flat or slightly higher sales than last year. It has planned to launch approximately RM1.3bil worth of new projects in 2022, with properties in China accounting for 60% of the total launches.
“On the domestic front, management anticipates that property sales will mainly be derived from bread-and-butter products at its existing townships.”
These will include the group’s projects such as IOI Resort City, Bandar Puteri Puchong, Bandar Puchong Jaya, 16 Sierra, Bandar Puteri Bangi, Warisan Puteri Sepang and Bandar Putra Kulai.
Despite fewer new launches and probable lower sales from China, TA Securities believes that the RM2.3bil sales target for 2022 is achievable, as completed inventory sales are expected to contribute more than half of new sales next year.
“Management has indicated that it will begin an aggressive inventory monetisation effort to clear RM2.4bil in completed inventories.”
Given the group’s strong financial position, TA Securities also said the debt crisis of China’s Evergrande Group is unlikely to have an impact on IOIPG’s projects in Xiamen, a port city in China.
“While Evergrande Group’s debt crisis has hurt buyer confidence in China, management expects the impact on its two Xiamen projects, namely IOI Palm City and IOI Palm International Parkhouse, would be minimal.
“Unlike other Chinese developers who are under pressure to sell their properties quickly to meet debt obligations, IOIPG is not under such pressure because the development costs of the on-going residential phases are being funded internally through the sale of properties in China that were completed previously.”
Additionally, TA Securities said it expects positive recovery for the group’s retail assets.
“According to management, shopper traffic has rebounded swiftly to an average level of 60% of what it was before the pandemic since the relaxation of economic restrictions in September.
“More promising, weekend footfalls are already reaching pre-pandemic levels.
“Our recent ground check also revealed that foot traffic at IOI City Mall, Putrajaya has been encouraging, indicating that recovery is imminent for IOIPG’s retail assets,” it pointed out.
However, TA Securities said IOIPG’s management acknowledged that its hospitality and leisure segment is recovering at a slower pace than the retail segment, as local tourist spending is insufficient to compensate for the loss of overseas visitors.