Kuala lumpur: IOI Properties Group Bhd (IOIPG) shares rose in the early trading session, buoyed by positive market sentiment. At 10.35 am, IOIPG shares gained two sen to RM2.21 with 465,300 shares traded.

According to BERNAMA News Agency, a research note from CGS International Securities Malaysia Sdn Bhd views IOIPG as an undervalued structural growth story, underpinned by a 15.6 per cent compound annual growth rate in financial years 2024-2027 forecast core earnings per share. This growth is driven by the expansion of its investment property portfolio and incremental earnings contribution from W Residences.

There is also potential for improvement in its gearing from the monetisation of its investment properties via REIT listings and improving earnings quality with resilient recurring income. IOIPG stands to benefit from accelerated growth in property demand in Johor, driven by the Johor-Singapore Special Economic Zone (JS-SEZ), thanks to its substantial landbank.

Following the recent addition of new investment properties and the commencement of IOI Central Boulevard Towers (ICBT) in July 2024, IOIPG’s earnings quality has seen improvement, with increased contributions from its recurring income assets. The ongoing acquisition of the remaining 50.1 per cent stake in the South Beach development is expected to be earnings-accretive.

The company’s earnings before interest and tax (EBIT) contributions from its property investment segment are projected to rise significantly by FY2027, reducing susceptibility to fluctuations in property development earnings and narrowing the discount to revalued net asset value.

Recent media reports indicate that IOIPG is exploring two REIT listings, one for Malaysian assets and another for Singapore-based assets, signaling a strategic move to leverage its existing portfolio.