KUALA LUMPUR: Affin Hwang Capital says IOI Properties Group Bhd's sales for financial year 2023 (FY23) are on track to at least match FY22's.
Affin Hwang maintained IOI Properties' sales forecasts of RM2 billion in FY23 and RM2.24 billion in FY24.
IOI Properties' sales increased three per cent to RM927 million in six months of FY23 from RM896 million generated in six months of FY22, powered by domestic sales which acounted for 86 per cent of the total sales.
Affin Hwang said IOI Properties had new launches worth RM1.5 billion in the pipeline.
However, delays of some property launches are expected and the group will focus on selling its inventory units due to rising construction costs and cash flow improvement.
Affin Hwang expects the property development earnings before interest and tax (EBIT) margin to recover 40 per cent in FY23 to FY24 with higher contributions from high-margin products such as landed homes and landed shop offices.
The firm said IOI Properties was planning phase three expansion for its IOI City Mall after the completion of the second phase on Aug 25 last year.
Apart from that, IOI Central Boulevard Towers (IOI Central) in Marina Bay, Singapore is targeted for completion by the end of 2023.
"Key challenges faced are a labour shortage and tight construction site restrictions. It is benefiting from rising demand for Grade A office space in Singapore, especially from global tech giants.
"Bloomberg reported that Amazon has signed a lease for about 369k sqft at IOICBT with a gross effective rental of S$10 per square foot, citing market talk. We gather that lease commitments are currently c.30 per cent of the total net lettable area of 1.3 million sq ft at IOI Central," it said.
Affin Hwang reaffirmed its positive outlook on IOI Properties for its deep value and growing property investment's EBIT that came from 14 per cent of total EBIT in FY25 with the full-year contribution of IOI Central.
IOI Properties remained a top sector "Buy" with a higher 12-month target price of RM1.54 from RM1.40, Affin Hwang said.
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