IOI Properties - Bursa Marketplace

11 November 2014
Raising RM1.0bn via 1-for-6 rights issue
IOIPG has proposed to undertake a rights issue of 1-for-6 to raise up
to RM1.0bn. The proceed will be utilised for capex, working capital
and for potential investment opportunities. The rights price has been
fixed at RM1.90/share. We have imputed the potential dilution into
our earnings forecast and valuation. We downgrade IOIPG to
REDUCE with a revised target price of RM2.34 (ex-all price).
Rights issuance at 1-for-6
IOI Properties has proposed to undertake a rights issue of 539.8m at an
issue price of RM1.90 per share on the basis of one (1) right for every six
(6) existing shares (1-for-6). The price was derived at a 28% discount to 5day volume market average market price (VWAP) including 7th November.
The group also proposed an ESOS of up to 10% of its issued and paid up
capital.
Company Update
IOI Properties
IOIPG MK
Sector: Property
RM2.70 @ 11 November 2014
(Theoretical ex-price: RM2.59)
REDUCE (downgrade)
Downside 7%
Price Target: RM2.34 (ex-all)
Previous Target: RM2.46 (ex-all)
To raise up to RM1.0bn
The exercise will raise an estimated gross proceed of RM1.0bn, of which,
the bulk of the proceeds will be utilised for capex and investment
opportunities (fig 1). Capex planned includes development cost for
common infrastructure at IOI City Tower 1, IOI City Tower 2 and IOI City
Hotel as well as for future investment opportunities. The exercise is
estimated to be completed by 1Q15.
Earnings dilution of up to 14%, improvement to gearing
We are neutral on the proposed rights issue and ESOS scheme. While the
proposed rights issue will inevitably dilute IOIPG earnings by 14%, it would
enable the group to sustain its capex program without putting a further
strain on its balance sheet. Assuming a base case scenario (assuming full
subscriptions for the rights shares but no conversion of ESOS options), we
estimate IOIPG’s net gearing level will improve to 0.04x from 0.06x as at
30th June 2014.
Downgrade to REDUCE with a revised ex-all target price of RM2.34
The exercise is expected to complete in 1Q15. Given that the price has
been fixed at RM1.90/share, we have imputed the dilution impact to our
forecast. As share price has run ahead of fundamentals (after an upgrade
to Add in August), we are downgrading IOIPG to REDUCE with a revised
ex-all TP of RM2.34 (from RM2.46), still based on 40% discount to RNAV.
Earnings & Valuation Summary
FYE 30 Jun
2013
Revenue (RMm)
1323.3
EBITDA (RMm)
636.9
Pretax profit (RMm)
904.8
Net profit (RMm)
693.6
Adj EPS (sen)
18.4
PER (x)
12.6
Core net profit (RMm)
520.9
Adj Core EPS (sen)
13.8
Core EPS growth (%)
16.4
Core PER (x)
16.8
DPS (sen)
0.0
Dividend Yield (%)
0.0
EV/EBITDA (x)
13.8
2014
1454.4
615.6
1151.8
913.4
24.2
9.6
417.6
11.1
-19.8
20.9
8.0
3.0
16.5
Chg in EPS (%)
Affin/Consensus (x)
2015E
1990.3
784.1
838.5
641.8
17.0
15.9
641.8
17.0
31.7
15.9
8.5
3.1
15.1
2016E
2808.6
1074.4
1168.3
898.3
23.8
11.4
898.3
23.8
40.0
11.4
9.0
3.3
11.2
2017E
3367.1
1164.2
1197.5
909.9
24.1
11.2
909.9
24.1
1.3
11.2
9.5
3.5
10.4
-14.3
1.0
-14.3
1.1
-14.3
0.9
Price Performance
1M
+3.4%
+2.4%
Absolute
Rel to KLCI
3M
+9.8%
+11.0%
12M
NA
NA
Stock Data
Issued shares (m)
3,239.0
Mkt cap (RMm)/(US$m)
8,745.3/2,620.9
Avg daily vol - 6mth (m)
3.1
52-wk range (RM)
2.38-3.56
Est free float
39%
BV per share (RM)
3.46
P/BV (x)
0.78
Net cash/ (debt) (RMm) (4Q14)
(1,439)
ROE (2015F)
5.4%
Derivatives
Nil
Shariah Compliant
Yes
Key Shareholders
Tan Sri Dato’ Lee Shin Cheng
EPF
50.2%
13.2%
Source: Affin Hwang, Bloomberg
Sharifah Farah
(603) 2145 0327
[email protected]
Source: Company, Affin Hwang estimates
*Adjusted for Rights issue
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 1 of 5
11 November 2014
Fig 1: Proposed utilization of proceeds
Details of utilisation of proceeds
Estimated timeframe
RMm
%
Capital expenditure
Within 18 months
500.0
48.7
General working capital
Within 18 months
324.8
31.6
Investment opportunities
Within 24 months
200.0
19.5
Estimated expenses
Within 18 months
0.9
0.2
1,025.7
100.00
Total
Source: Company
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 2 of 5
11 November 2014
Fig 2: IOIPG’s RNAV
Source: Company, Affin Hwang estimate
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 3 of 5
11 November 2014
IOIPG - FINANCIAL SUMMARY
Source: Affin Hwang estimates, IOIPG
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 4 of 5
11 November 2014
Equity Rating Structure and Definitions
BUY
Total return is expected to exceed +15% over a 12-month period
TRADING BUY (TR Total return is expected to exceed +15% over a 3-month period due to short-term positive development, but fundamentals are not strong enough to warrant a
BUY)
Buy call. This is to cater to investors who are willing to take on higher risks
ADD
Total return is expected to be between 0% to +15% over a 12-month period
REDUCE
Total return is expected to be between 0% to -15% over a 12-month period
TRADING SELL
(TR SELL)
Total return is expected to exceed -15% over a 3-month period due to short-term negative development, but fundamentals are strong enough to avoid a Sell
call. This is to cater to investors who are willing to take on higher risks
SELL
Total return is expected to be below -15% over a 12-month period
NOT RATED
Affin Investment Bank does not provide research coverage or rating for this company. Report is intended as information only and not as a recommendation
OVERWEIGHT
Industry, as defined by the analyst’s coverage universe, is expected to outperform the KLCI benchmark over the next 12 months
NEUTRAL
Industry, as defined by the analyst’s coverage universe, is expected to perform inline with the KLCI benchmark over the next 12 months
UNDERWEIGHT
Industry, as defined by the analyst’s coverage universe is expected to under-perform the KLCI benchmark over the next 12 months
This report is intended for information purposes only and has been prepared by Affin Hwang Investment Bank Berhad (14389-U) (formerly known as HwangDBS Investment Bank
Berhad) (“the Company”) based on sources believed to be reliable. However, such sources have not been independently verified by the Company, and as such the Company does
not give any guarantee, representation or warranty (express or implied) as to the adequacy, accuracy, reliability or completeness of the information and/or opinion provided or
rendered in this report. Facts, information, views and/or opinion presented in this report have not been reviewed by, may not reflect information known to, and may present a differing
view expressed by other business units within the Company, including investment banking personnel. Reports issued by the Company, are prepared in accordance with the
Company’s policies for managing conflicts of interest arising as a result of publication and distribution of investment research reports. Under no circumstances shall the Company, its
associates and/or any person related to it be liable in any manner whatsoever for any consequences (including but are not limited to any direct, indirect or consequential losses, loss
of profit and damages) arising from the use of or reliance on the information and/or opinion provided or rendered in this report. Any opinions or estimates in this report are that of the
Company, as of this date and subject to change without prior notice. Under no circumstances shall this report be construed as an offer to sell or a solicitation of an offer to buy any
securities. The Company and/or any of its directors and/or employees may have an interest in the securities mentioned therein. The Company may also make investment decisions or
take proprietary positions that are inconsistent with the recommendations or views in this report.
Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to your financial
status, risk and return preferences and hence an independent evaluation is essential. Investors are advised to independently evaluate particular investments and strategies and to
seek independent financial, legal and other advice on the information and/or opinion contained in this report before investing or participating in any of the securities or investment
strategies or transactions discussed in this report.
Third-party data providers make no warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability
for any damages of any kind relating to such data.
The Company’s research, or any portion thereof may not be reprinted, sold or redistributed without the consent of the Company.
The Company, is a participant of the Capital Market Development Fund-Bursa Research Scheme, and will receive compensation for the participation.
This report is printed and published by:
Affin Hwang Investment Bank Berhad (14389-U)
(formerly known as HwangDBS Investment Bank Berhad)
A Participating Organisation of Bursa Malaysia Securities Bhd
Chulan Tower Branch,
3rd Floor, Chulan Tower,
No 3, Jalan Conlay,
50450 Kuala Lumpur.
www.affininvestmentbank.com
Email : [email protected]
Tel : + 603 2143 8668
Fax : + 603 2145 3005
Affin Hwang Investment Bank Bhd (14389-U)
(Formerly known as HwangDBS Investment Bank Bhd)
Page 5 of 5

Download Report