IOI Properties earnings momentum going strong

PETALING JAYA: Analysts expect IOI Properties Group Bhd’s earnings momentum to strengthen further going into the second half of its financial year 2026 (2H26), buoyed by higher recurring income from its property investment division.

Following the group’s latest stronger-than-expected 1H26 results, TA Research raised the company’s earnings forecasts for FY26, FY27 and FY28 by 13%, 15% and 15% respectively.

This reflected higher occupancy and rental assumptions, as well as improved net property income (NPI) margin assumptions for the property investment division, the research house said in a report.

“We also revised upward our occupancy and average room rate assumptions for the hospitality segment,” it added.

The hotel segment should continue to benefit from Visit Malaysia 2026 initiatives, while losses at IOI Properties’ China hotel operations are expected to narrow progressively

TA Research, which kept a “buy” call also raised the stock’s target price to RM4, following its earnings revision and rolling forward the valuation base year to calendar year 2027.

MBSB Research, in a note to clients, said it maintained earnings forecasts on IOI Properties for FY26, FY27 and FY28.

Despite its “neutral” call on the stock, the research house has revised the target price higher at RM3.17 from RM2.97 previously, as “we narrow the evised net asset value discount to 38% from 42% in view of the stable outlook for new sales and earnings.”

It noted that the listing of the real estate investment trust (REIT) by IOI Properties by 2026 would remain the near-term catalyst.

The recent land sales in Banting Industrial Park, Selangor also augured well to unlock the value of its land bank.

Nevertheless, IOI Properties’ net gearing is elevated at 0.9 times as of 2Q26.

“Besides, we think its valuation is stretched, trading at price to book of 0.76 times, which is above its +2 standard deviation of nine-year mean price-to-book ratio of 0.66 times,” said MBSB Research.

According to a property analyst, IOI Properties’ earnings are expected to be helmed by stronger property investment returns from its Singapore assets, namely IOI CBT and JW Marriott Hotel.

“Post results briefing, we are more optimistic on the group’s operating margins with property development benefiting from a better product mix while its investments and hospitality assets report stronger profitability.”

In a report, Kenanga Research said IOI Properties would continue to steer the development of W Residences Singapore, Marina View as well as the development of IOI Industrial Park Series, the construction of IOI City Mall phase three and IOI Mall Rio, and the value unlocking of its investment properties through the ongoing REIT listing preparation.

Its property development pipeline aimed to introduce more industrial products into its portfolio, albeit still within a preferred mix of 70:30 residential and non-residential products, the research house noted.

Meanwhile, IOI Properties’ unsold inventories continued to see a healthy declining trend with the group keeping its RM2bil sales target for FY26 intact, fuelled by its core township developments in Puchong and IOI Resort City.

On property investment, the group’s completed consolidation of Scottsdale Properties (from a 49.9%-stake) further supplemented its Singaporean investment asset portfolio with the inclusion of South Beach Tower.

The incorporation of its REITs subsidiary is on track to be finalised by 2H26, which would help the group in paring down its debts and net gearing of 0.90 times.

Kenanga Research, meanwhile, has raised its FY26-FY27 earnings forecasts by 20% and 15% as “we account for stronger profit margins from IOI Prop’s property development unit, led by improving product mix, and improving outlook for its hospitality segment.

It raised the stock’s target price to RM3 from RM2.81 previously.

However, Kenanga Research has downgraded the stock to “underperform” after its share price rallied by 31% year to date ahead of its planned REIT listing.