IOI Properties Group Bhd (IOIPG) has posted a first quarter of financial year 2024 (1QFY24) core net profit (CNP) of RM175.1 million, translating to a slight contraction of 12.8 per cent year on year (y-o-y) and a63 per cent quarter on quarter (q-o-q) increase.

During the period under review, the group’s revenue contracted by a narrower 6.3 per cent y-o-y to RM648 million due to weaker revenue from its property development segment due to lower property sales contribution from both Malaysia and China.

The group managed to reach 29 per cent of its FY24F sales target of RM2 billion thus far with new sales during 1QFY24 growing by 31 per cent y-o-y too RM587 million. 64 per cent of the new sales were from property sales in Malaysia and China while the remainder proceeds from land sales amounting to RM211 million.

The group’s unbilled sales had dropped by 18 per cent q-o-q instead to RM509 million and now represents a cover ratio of only 0.2-fol of its FY24 forward property development revenue.

Despite this low unbilled sale cover ratio, AmInvestment Bank guided that they believe the group’s FY24F revenue and core net profit will mainly be supported by the group’s efforts to monetise its existing inventory of RM2.7 billion.

“Notably, 43 per cent of its inventories are from overseas with the remaining 57 per cent from Malaysia,” they highlighted.

Meanwhile, the group’s completed inventories during the quarter expanded by 13 per cent q-o-q but only due to then reclassification of its office and retail units in Conezion Commercial from investment properties to inventories, and its Kulai agricultural land from development to inventories.

“Excluding these reclassifications, the group’s completed inventories reduced 7 per cent q-o-q, in line with IOIPG’s inventory monetisation effort,” the analyst shared.

For property launches, the group has hit 10 per cent of its own FY24F targeted launch of RM12 billion with RM1.2 billion worth of launches in 1QFY24. But it reported a low average take up rate for these launches at only 36 per cent.

“The low take-up rate was attributed to three out of five projects launched being recently introduced in September 2023, the final month of 1QFY24,” the analyst explained.

Its largest project in its pipeline, Marina View Residences in Singapore with a gross development value of RM8.6 billion is expected to launch in 3QFY24 and contribute positive to its topline by FY25.