IOI Properties reports lower 4Q net profit despite revenue increase, pays lower dividend

KUALA LUMPUR (Aug 28): IOI Properties Group Bhd has reported a lower net profit for the fourth quarter ended June 30, 2020 (4QFY20) despite a rise in revenue.

The net profit of RM47.95 million is 32.81% lower than the RM71.36 million reported in the preceding quarter (3QFY20) and 65.69% lower than the RM139.77 million recorded a year earlier (4QFY19).

Quarterly revenue rose 52.07% to RM610.47 million from RM401.43 million in 3QFY20 and by 22.64% from RM497.79 million in 4QFY19, on higher contribution from property development.

The group has declared an interim dividend of 1.5 sen per share, compared with three sen a year earlier, payable on Oct 23.

In its filing with Bursa Malaysia, IOI Properties said that after excluding fair value and impairment losses on investment properties, property development costs and inventories written down in value and net foreign currency translation gain on foreign denominated borrowings and deposits, the group would have recorded a profit before tax of RM341.2 million for 4QFY20.

This is 115% higher than the profit before tax of RM158.7 million reported in 4QFY19, thanks to higher contribution from the property development segment, share of result of an associated arising from the sale of land and lower share of joint ventures in Singapore.

The group said it recognised fair value and impairment losses on investment properties of RM104.8 million during the quarter,  mainly attributable to the office sub segment due to challenging market conditions caused by the COVID-19 pandemic.

IOI Properties said the property development segment recorded revenue and operating profit of RM544.6 million and RM314.9 million, up 53% and 193% respectively compared with 4QFY19.

The property investment segment, meanwhile, recorded revenue and operating profit of RM54.4 million and RM17.7 million, about 40% and 67% lower compared with 4QFY19.

The group said this is due to lower rental income arising from rental relief assistance extended to non-essential tenants, as well as lower car park income as a result of the imposition of the Movement Control Order (MCO).

The hospitality and leisure segment saw its revenue decreasing by 80% from RM48.8 million to RM9.8 million. It posted an operating loss of RM20 million compared with an operating profit of RM3.4 million previously.

The group attributed this to the drop in occupancy rate and loss of revenue due to the imposition of the MCO which restricted domestic and inbound travel, group and corporate functions and events.

For the full year, IOI Properties saw its net profit falling by 31.09% to RM455.69 million from RM661.29 million in FY19, as revenue declined 3.69% to RM2.11 billion from RM2.2 billion.

The group remains optimistic on the longer-term prospects of its projects as its developments and assets are located at strategic locations with good infrastructural networks and amenities, and supported by experienced and professional management teams.

IOI Properties’ share price rose 1.5 sen or 1.68% to 91 sen today, valuing the group at RM5.01 billion. Some 41,600 shares were traded. Year to date, the stock has fallen 27% from RM1.24.