IOI Properties Group Berhad (IOIPG) reported a 13% increase in revenue to RM1.3 billion while operating profit was 7% higher to RM511.2 million in the first six months of financial year 2021 (FY2021) in comparison to the preceding year corresponding period, despite the challenging business environment due to the COVID-19 pandemic.
The improvement in revenue and operating profit was mainly due to higher than expected contribution from its operations in Xiamen, China. For the period ended 31 December 2020, the Group recorded a total sales value of RM916.4 million.
“We expect that the measures announced in Budget 2021 and Home Ownership Campaign will continue to stimulate the property market in Malaysia, boosting demand for mid-priced range products that are highly sought after in our integrated developments located in high-growth areas, complemented by a wide range of amenities and easily accessible with excellent connectivity,” said IOIPG Chief Executive Officer Dato’ Voon Tin Yow.
With the Overnight Policy Rate (OPR) at a historical low of 1.75% during the period under review, Dato’ Voon said that this had also bode well for the growth of the property market as the lower OPR offered opportunities for property purchasers to secure bank loans with attractive interest rates.
This would continue to generate buying interest, benefitting the Group as it offers a range of high-quality products in strategic locations. For the second quarter ended 31 December 2020 (Q2 FY2021), IOIPG registered a net profit of RM172.3 million compared with RM215.1 million in the preceding year corresponding quarter.
Meanwhile, revenue for the Group was RM591.3 million, an increase of 5% from RM564.1 million in the preceding year corresponding quarter which was mainly attributable to the property development segment.
The property development segment contributed RM494.9 million in revenue and RM192.6 million in operating profit in Q2 FY2021, a jump of 20% and 19% respectively from the preceding year corresponding quarter.
This improvement in revenue and operating profit was mainly driven by higher than expected sales contribution from operations in China. Revenue and operating profit for the property investment segment were at RM73.6 million and RM31.3 million respectively while the hospitality and leisure segment recorded a revenue of RM21.1 million.
The reinstatement of MCO 2.0 has dampened the recovery of the property investment, and hospitality and leisure segments. Nevertheless, the Group’s hospitality and leisure segment will maintain its aggressive marketing and promotion packages, whilst implementing cost optimisation strategies by progressively right-sizing the workforce in preparation for medium and long-term recoveries.
Meanwhile, the property investment segment comprising retail and office will continue to adopt active and pragmatic tenant retention strategies to maintain occupancy rates; as well as to improve tenant mix in positioning its malls as retail destinations of choice.
“The Group supported its tenants with rental relief valued at more than RM45.3 million from March to December 2020,” added Dato’ Voon.
In Singapore’s Central Business District, the construction of Central Boulevard office development has resumed since August 2020. Effort is being made to catch up on lost time resulting from the Circuit Breaker imposed by the Singapore government in April 2020.
The operations in China contributed strongly to Q2 FY2021 operating profit due to brisk sales following the Chinese economic recovery from the COVID-19 pandemic. It is expected that demand for residential properties would subsequently normalise and moderate in coming quarters.
Meanwhile, IOI Palm City Mall, which is expected to open by the third quarter of 2021, has secured high occupancy; and the construction of boutique office blocks and Sheraton Grand Hotel is progressing well.
Moving forward, IOIPG’s digital marketing capabilities and IOI eMarketplace platform complemented by aggressive sales and marketing strategies will continue to drive sales and facilitate property transaction processes in Malaysia to offer quality products and lifestyle-driven by technology.
The Group will continue to enhance customer experiences in its continued commitment to maintain its competitive edge as an integrated developer of excellent service and high-quality standards.
Although the operating environment remains challenging and uncertain, the Group will continue to manage its business operations prudently and professionally to deliver satisfactory performance in the coming quarters whilst consolidating its market position and strengthening its competitive edge to seize business opportunities when the situation improves.