KUALA LUMPUR: IOI Properties Group Bhd has not been enjoying a sustainable share price recovery similar to its peers, but its value has emerged.
This was due to the increasing stream of recurring income, especially upon the completion of Central Boulevard next year, RHB Research said.
In a note today, RHB Research said the construction of the Grade A Green Mark Platinum office towers would be completed in 2023.
"We are optimistic on the rental prospects of this asset as quality office space is highly sought after with the expansion of regional technology/telecommunication sectors in recent years.
"Management also indicated that the initial response for leasing looks quite promising. Assuming a conservative rental rate of SG$10-SG$11 per sq ft, Central Boulevard can generate a whopping RM350-RM450 million in rental income per year."
This should form a good earnings base for the company to raise its dividend payout in the future, RHB Research added.
Besides that, the firm said IOI Properties was also a beneficiary of the reopening of the economy as earnings from its property development and property investment should normalise back to pre-pandemic levels.
Based on a meeting with IOI Properties chief executive officer Datuk Voon Tin Yow, RHB Research said the company had indicated that it was prepared to ride through this volatile period, given its diversified products and geographical locations, as well as contribution from investment properties (14 per cent of revenue currently).
"However, management guided to be extra careful with the timing of the launches given heightening building material prices.
"In our view, the early construction of projects (before launching) should help in preserving margins too, as more materials are secured at lower prices much earlier," it said.
RHB has maintained its "Buy" call on IOI Properties, with an unchanged target price of RM1.38.