Monday February 13, 2012
PETALING JAYA: IOI Corp Bhd
is mulling a relisting of its property arm that would see the group
unlock values in that segment and enhance the attractiveness of the
parent company to investors as a more plantation-focused company,
according to reliable sources.“The group is in discussion with
two investment banks on this to get feedback, especially on the right
timing of the exercise,” said a source.
Analysts said the
relisting of its property division would increase the stature of IOI
Corp as a pure plantation play which would likely have higher
valuations. “It will reduce the conglomerate discount and
transform IOI Corp into a pure plantation play, with a controlling stake
in a valuable property company IOI
Properties. Sole industry companies usually tend to fetch higher
valuations,” an analyst with a local bank-backed research house said. IOI Corp may wish to also time the relisting of its property arm in line with a more bullish view on the property sector.
In a sales note to its clients issued in January, Maybank
IB said that potential downsides had already been priced into the
property sector and that it did not discount the possibility of raising
its call on the property sector from “neutral” to “overweight” in the
medium to longer term as developers today were “backed by considerable
unbilled sales, providing near-term earnings visibility.”
IOI Corp had privatised its arm in 2009. Then known as IOI Properties Bhd, IOI Corp had on Februuary 2009 launched a takeover offer at RM2.60 per share. The
takeover was successful and IOI Properties was subsequently delisted on
April 28, 2009. It is today wholly-owned by IOI Corp. IOI Corp has been
actively growing its property business since.
In January it
acquired six acres of land in Singapore for RM995.5mil to build high-end
condominums and will have to settle the entire amount to the government
of Singapore within 90 days from the date of the tender acceptance
letter. Presently, it has seven projects which it is developing
locally with estimated gross development values (GDVs) of almost
RM20bil.Properties can testify to its track record in building
property projects that have sold well. Excluding the latest land buy in
Singapore, it is also presently developing high-end projects in the
southern neighbouring island state with GDVs close to RM6bil.
IOI Properties has completed property development projects in Puchong, Putrajaya, southern Johor and Singapore before. Meanwhile, banking sources also said that IOI Corp was in talks with banks to raise more funds. “It is in a good position to do so, considering its huge cash flows from its plantation side of the business,” said one banker. The
funds raised should give IOI Corp sufficient funds to not only pay for
the Singapore land acquisition but also ready funds in the event it
chooses to buy more assets such as plantation land.
Based on its
results for the first quarter ended Sept 30, 2011, IOI Corp had total
short and long-term borrowings of RM688.24mil and RM4.87bil
respectively. Most of these debts are denominated in the US dollar, the
Singapore dollar and the yen. IOI Corp had cash and cash equivalents of RM3.22bil as at Sept 30, 2011
By RISEN JAYASEELEN and DANIEL KHOO
starbiz@thestar.com.my
