IOI Properties' Singapore expansion to drive 9pct earnings uplift in FY26
Hong Leong Investment Bank Bhd (HLIB) said the acquisition could contribute an earnings uplift of RM89.5 million or 1.63 sen in earnings per share (EPS) in calendar year 2026 (CY26), representing nearly nine per cent of projected financial year 2026 (FY26) earnings.
"Post-acquisition, net gearing is estimated to rise to 0.93 times from 0.70 times as at June 30, 2024," it said in a note.
Yesterday, IOI Properties announced it is acquiring the remaining stake in South Beach development for S$834 million (RM2.75 billion), taking full ownership of the Grade A office, JW Marriott Hotel, and its retail component.
HLIB said the group's higher gearing remains manageable given its stable recurring income, strong assets, and upcoming real estate investment trust (REIT) listing plan.
The firm also noted that the acquisition involves operational, cash-generating assets unlike previous deals such as IOI Central Boulevard and Marina View, which locked in capital for several years before yielding returns.
"As such, we expect the steady income streams from the South Beach development to sufficiently cover interest obligations, supporting a healthier debt servicing profile," it said.
HLIB has maintained its "Buy" rating for the group with an unchanged target price of RM4.05.
The firm said IOI Properties offers investors a rare diversified market exposure, anchored by its strategic presence in Singapore's resilient and high-value real estate market.
It also holds a deep-rooted position in Malaysia's property sector, which is undergoing a structural uplift driven by economic reforms, infrastructure push, and industrial expansion.
"This diversified footprint provides both defensive stability and growth opportunity, reinforcing IOI Properties' position as a compelling proxy for long-term property sector upside across the region," it added.
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