IOI Properties 1Q profit declines 54% amid lower contribution from development projects

KUALA LUMPUR (Nov 243): IOI Properties Group Bhd net profit declined 54.3% to RM111.96 million for the first quarter ended Sept 30, from RM245.1 million a year earlier, as the group saw lower property sales from Singapore and lower contribution from development projects in Malaysia.

Revenue for the quarter fell 36.6% to RM560.06 million from RM882.77 million in the previous year’s corresponding quarter.

In its filing with the bourse, IOI Properties said it saw lower sales from Singapore due to fewer units remaining for sale in The Trilinq.

In Malaysia, the group saw less progress works from ongoing development projects, as sales are mainly from completed projects.

“The above were partly offset by higher contribution from our China operations arising from the recent launch of high-rise condominium that saw high sales take-up rate,” it said.

Its property investment segment saw a slight year-on-year increase of 1% in operating profit to RM50 million, while revenue grew 10% to RM85 million.

The group attributed the increase in revenue to higher occupancy and rental rates for the retail and office segments, while the lower rate of increase in operating profit was mainly due to lower profit contribution from IOI Puchong Mall due to refit exercise and higher operating expenses incurred for newly completed investment projects.

The hospitality and leisure segment saw a 12% decline in operating profit to RM6.6 million, as the hotel segment saw higher occupancy rate in the previous year due to the Southeast Asian Games.

Despite the challenges in the external environment, the group said the launch of its high-rise residential development in IOI Palm City in Xiamen, China, saw a strong take-up rate.

Going forward, IOI Properties said the sustained development in China will contribute positively to its results in the future, as the group proceeds with residential developments comprising mid to high-rise condominiums and town villas in IOI Palm City worth RMB4 billion within the next two years.

Locally, the group said it is cautiously optimistic of properties in strategic locations with good transportation infrastructure and amenities, amid the subdued Malaysian property market.

“The group will dynamically adapt its marketing strategies in tandem with domestic developments to address the prevalent affordability gap and to unlock development value in the longer term,” it said.

IOI Properties' shares closed up 2 sen or 1.21% at RM1.67, giving it a market capitalisation of RM9.2 billion.