KUALA LUMPUR: IOI Properties Group Bhd should report over RM1 billion headline profit in the fourth quarter (Q4) 2024 that includes revaluation gain from IOI Central Boulevard (IOICB).
Hong Leong Investment Bank Bhd (HLIB) said the contribution from IOICB to the core profit is likely to be minimal.
"Moving into Q1 2025, the group should see a strong quarter from Melaka land sale gain as well as a sharp turnaround for its hospitality segment.
"This is due to the contribution of its newly refurbished and acquired hotels—Palm Garden, Putrajaya Marriott, and Courtyard Penang," it said in a note.
However, HLIB said for Q2 2025, IOI Properties may see some operating losses from IOICB as interest is expensed.
Nonetheless, the firm said this should be cushioned by a seasonally stronger quarter from its hospitality segment.
"In the first half of 2025 (1HFY25), the company property investment and hotel assets also benefit from the lowering of the Imbalance Cost Pass Through (ICPT), rate by one sen per kWh for commercial electricity tariff rates," it said.
The recent acquisitions and announced expansion plans provide HLIB with a glimpse and clearer visibility of IOI Properties's future growth trajectory.
The company's founder's late Tan Sri Datuk Lee Shin Cheng leadership thus far has shown it is relentless and aggressive in its growth.
As such, HLIB believes investors can be reassured that the group is proactive and is constantly on the lookout for attractive expansion opportunities.
"At the same time, investors should also be prepared that the company's net gearing is likely to continue to stay elevated due to the pursuit of these opportunities.
"We view the recent share price weakness as a shifting in investors profiles, with the stock changing hands from investors who are not comfortable with the company's net gearing level to those who are comfortable with it and see value in the group's aggressive expansion drive and new ventures.
"Our forecast is unchanged. (We) maintain our buy call with a higher target price of RM3.60 from RM3.30," it added.