Close ↓
IOI Palm City is the first mega scale urban mixed-use development project invested by IOI Properties Group Bhd in China. - Pic credit IOI Properties
IOI Palm City is the first mega scale urban mixed-use development project invested by IOI Properties Group Bhd in China. - Pic credit IOI Properties

IOI PROPERTIES Group Bhd (IOIPG) plan to launch its Xiang An project in Xiamen, China progressively starting May this year should the condition continues to improve.

This was revealed by AmInvestment Bank in the firm's recent research note.

According to AmInvestment, IOIPG's operations in China is heading back to normal.

"During a recent engagement, IOIPG had said that the environment has been challenging since the beginning of the Covid-19 outbreak. It said with lockdowns and curfews, workers are not able to return to their work place and economic activities were limited.

"However, the situation has improved beginning early March as factories in China gradually restarted production and workers returned to their working place," said the firm.

It noted that as of mid-March, economic activities in China have resumed, picking up their capacity.

Countries throughout the globe have imposed lockdowns and curfews on cities affected with Covid-19, limiting economic activities, banning people from moving around and from their workplace.

Wuhan in China was the first city to be affected with Covid-19, but the situation has improved from early this month.

Xiamen project

Xiang An or Xiamen 3 is IOIPG's third project in Xiamen, and the launch gross development value (GDV) is around one billion yuan.

IOIPG acquired a 2.51-hectare parcel of leasehold land in Xiang An central business district in Xiamen, for about RM1.4 billion in 2016 for the project.

The land was acquired via its indirect 99.8 per cent-owned subsidiary IOI (Xiamen) Properties Co Ltd through a competitive bidding conducted by the Xiamen Bureau of Land Resources and Real Estate Management.

IOIPG had been sourcing for land banks in China with development potential following the completion of the group's maiden property project, the IOI Park Bay in Jimei and the launch of IOI Palm City.

IOI Palm City is the first mega scale urban mixed-use development project invested by IOIPG in China and the second for the property group in the People's Republic.

The project built-up area is more than a million square meters, sprawled over hundreds of acres, with total investment expected to be over RMB 8 billion Yuan.

IOIPG had been planning to launch one billion renminbi worth of projects in the fourth quarter of 2019 with the main focus in Xiamen.

The previous launch of properties in Xiamen back in September 2018 had seen positive results with almost all the properties sold within a day.

IOIPG remains optimistic on the prospects of its projects in China as they are located close to amenities and infrastructure.

IOIPG performance may be affected this year

AmInvestment reckon the long-term outlook for IOIPG remains positive anchored by a positive contribution from its property development projects, stable income from its property investments and its growing leisure and hospitality business.

However, it said the management (IOIPG) is still assessing the local property sales and may likely consider reducing its sales target.

AmInvestment also thinks IOIPG’s investment properties, as well as hospitality and leisure business will be affected as well.

"We believe the situation in Malaysia is less serious than in China, nonetheless, we shall remain cautious. With the movement control order put in place from 18 to 31 March 2020, we expect a negative impact on local property sales," said the firm.

IOIPG has property projects in Selangor, Johor, Penang and Negeri Sembilan, and four developments in Singapore namely, Seascape @ Sentosa Cove, Cape Royale @ Sentosa Cove, South Beach @ Beach Road and The Triling @ Jalan Lempeng.

AmInvestment said it maintain its BUY recommendation on IOIPG with a lower fair value of RM1.54 from RM1.73 based on SOP valuation.

"We cut our FY20 to FY22 net earnings forecasts by 20 per cent, 17 per cent and 16 per cent respectively to reflect the timing of recognition of property development and weaker revenue in the hospitality and leisure business segment," said the firm.

Close ↓