KUALA LUMPUR - Amid uncertainties in the property market, IOI Properties Group Bhd made a bright start on its market debut, where its restricted offer shares, the first listing for the year, rose 28%.
The stock opened at RM3.21, a 70-sen premium over its offer price of RM2.51, with 6.72 million shares traded. It closed at RM3.15, a 64-sen increase, with a total of 66.1 million changing hands.
“This year will be a challenging year (for the property market) in the face of several measures that’s been introduced by the government but nevertheless we’re very positive because of our diversity in terms of our geographical location and the different market segments that we serve throughout Malaysia, Singapore and China,” its recently appointed CEO Lee Yeow Seng told reporters at the listing ceremony yesterday.
The restricted offer for sale was expected to raise proceeds of about RM1.875 billion mainly to repay bank borrowings.
“The way the initial public offering was structured was mainly to benefit our shareholders who have been with us for many years. So, as to what new shareholders and investors see in our company, they will definitely have to analyse our profits and our prospects. If they see value in it, I think they would want to come in and we welcome them,” said Yeow Seng.
The listing enables it to maximise the potential value of its 10,000-acre landbank now that its former parent company IOI Corp Bhd is a pure plantation player. The property company’s key activities include property development, property investment and hospitality and leisure.
Yeow Seng said IOI Properties it is always on the lookout for new investment opportunities in other countries but has no targets at the moment and will need time to study new markets.
“I wouldn’t rule out venturing into the UK (like SP Setia Bhd and Sime Darby Bhd) but, at this moment, we haven’t started looking into the market yet,” he added.
At a recent press event, Yeow Seng said it aims to achieve RM2.5 billion to RM3 billion in sales for the financial year ending June 30, 2015.
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His father and chairman of IOI Properties, Tan Sri Lee Shin Cheng, said the opening price was within the expected range and is confident that it will hold for a long time.
“The biggest market capitalisation (of RM8.13 billion) is not important. What is important to me is the growth of the company, whether it is sustainable or not.
“We’re going to build up more long term property investment. Not only just long term property investment but we’re also going overseas to become a multinational developer,” he said.
On dividends, Shin Cheng said it is “too early to say at this point of time” and will depend on the profits achieved by the company.
As for plantations, he said palm oil prices may reach RM2,800 per tonne in the first quarter of this year.
“Palm oil prices are now hovering between RM2,500 and RM2,600 per tonne. After some time, it will probably go up further. The rationale behind this is demand is more and we’re going into the low crop period now. During the rainy season it is difficult to do harvesting so that will reduce stocks to a certain extent,” he added.
Hong Leong Investment Bank Research has a “buy” call on IOI Properties with a target price of RM4.01 on the back of the company’s proven track record, strong earnings growth and unbilled sales of RM1.2 billion, as reported in The Sun Daily.