Shariah compliance and REIT plans may propel IOI Properties to join KLCI as early as end 2025 — HLIB

• HLIB also highlighted IOI Properties as an overlooked beneficiary of the Johor-Singapore Special Economic Zone (JS-SEZ), holding the largest landbank in Johor among developers, totalling 5,200 acres.

KUALA LUMPUR (Feb 6): IOI Properties Group (KL:IOIPG) may be added to the FTSE Bursa Malaysia KLCI — the top 30 largest stocks by market capitalisation — by late 2025 or 2026, according to Hong Leong Investment Bank (HLIB).

Multiple catalysts are emerging, positioning the property group as a standout performer in the year ahead, HLIB stated in a note on Monday.

IOI Properties’ conventional loan-to-total assets ratio dropped to 32.6% in FY2024, falling below the shariah-compliance threshold set by the Securities Commission Malaysia. As a result, HLIB expects the stock to be classified as shariah-compliant in the upcoming May review.

Strong Shariah financing and an expected asset revaluation gain by end-FY2025 should help the group maintain compliance and boost institutional interest, the house noted.

With 75% ownership concentration, limited free float adds scarcity value, making it attractive to investors seeking exposure, HLIB said. “A re-rating could be on the horizon, driven by higher demand and improved liquidity post-shariah classification.”

IOI Properties’ potential Real Estate Investment Trust (REIT) listing could also unlock substantial value from prime assets, including IOI City Mall, IRC hotels, W Hotel KL, Courtyard Penang Hotel, PFCC Puchong office, and IOI City Tower Putrajaya office.

“Should all of these assets be injected, we estimate that the REIT should be able to achieve market capitalisation surpassing RM7 billion,” HLIB said, adding that this would unlock significant capital for IOI Properties, reduce net gearing, and expand investment capacity.

HLIB also highlighted IOI Properties as an overlooked beneficiary of the Johor-Singapore Special Economic Zone (JS-SEZ), holding the largest landbank in Johor among developers, totalling 5,200 acres.

Among its assets, 1,100 acres of prime industrial land in Kulai is strategically positioned to attract data-centre players, and high-tech industrial investors, the house noted.

“Other than this, it also has a very sizable 2800 acres of residential land in Kulai, which is poised to capture rising demand from the vibrant growth in nearby industrial developments,” HLIB stated.

The group’s Singapore asset, IOI Central Boulevard, is nearing full occupancy and is expected to turn profitable by 1QFY2026, contributing RM200 million in FY2026, and over RM300 million in recurring earnings from FY2027 onwards, HLIB said.

HLIB maintains a “buy” recommendation on IOI Properties, with an unchanged target price of RM4.05.

At the time of writing, IOI Properties’ shares were two sen (0.94%) higher at RM2.14, giving it a market capitalisation of RM11.78 billion. However, the stock has declined 4.46% year-to-date.

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