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IOIPG set to be top property stock

PUTRAJAYA: IOI Properties Group Bhd (IOIPG), an IOI Corp Bhd’s spinoff, is poised to be the biggest property stock on Bursa Malaysia upon its listing next week, thanks to the optimism seen among the investing circles.

Although IOIPG’s market capitalisation is reported to add up to RM8.13 billion at the RM2.51-per-share reference price, there is good chance of it overtaking UEM Sunrise Bhd’s top spot. Currently, the RM10.8 billion UEM Sunrise is the most valuable property counter in the stock market.

Maybank Investment Bank Bhd analyst Ong Chee Ting, when contacted by Business Times, said: “Post-listing, IOIPG could potentially be the next property sector leader and the largest property stock.”

Applying a 20 per cent discount to independent valuers’ RM18 billion market value for IOIPG, he believes there is a high probability the company could be re-rated to above RM12 billion within the next one year.

Meanwhile, at a briefing here yesterday, IOI Corp executive chairman Tan Sri Lee Shin Cheng announced the appointments of his sons Datuk Lee Yeow Chor and Lee Yeow Seng as chief executives of IOI Corp and IOIPG, respectively.

When asked if he’s retiring, the 75-year-old Lee replied: “No, I’m not retiring yet. I’m still strong and I think I can serve for another 10 years.

“As executive chairman, I’ll be monitoring their progress. I’ll see if they do their jobs properly. If they do, then maybe I can retire earlier,” he added.

Asked if any of his four daughters could later be appointed to the IOI Corp and IOIPG boards, he said: “I don’t deny that possibility … my daughters are capable at what they do.”

Three months ago, under the 2014 Budget, the government raised the real property gains tax (RPGT) imposed on profits made when properties are sold within five years.

Starting this year, the Finance Ministry will be collecting 30 per cent tax on profits made from properties sold within three years, followed by 20 and 15 per cent in the fourth and fifth year, respectively. No tax is imposed if a property is sold after six years.

Asked if the higher RPGT rates will affect property sales, Yeow Seng said the new rates are to curb speculation. “This year, we’ll be launching several projects. We expect demand for affordable housing to drive sales,” he said. When pressed for an estimate, he replied the group has set out an internal target to achieve RM3 billion sales.

Following the spin-off of its property arm into IOIPG, IOI Corp will be left with RM4 billion cash. On the possibility of big payout for shareholders, Yeow Chor said: “After the exercise, IOI Corp will have a smaller profit base. To match previous years’ dividend payout, the ratio will have to be higher”.

He added that a portion of the RM4 billion will be used to pare down the group’s RM7 billion long-term borrowings. “Our gearing is in the region of some 40 per cent. In time, we would like to bring it down to around 10 per cent.”

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