Meanwhile, Kenanga Research has also indicate its neutral stance on the acquisition, citing that the deal will increase IOIPG’s fully diluted revised net asset value by 5% to RM5.98 and net gearing above the research house’s comfort level of 0.5 - 0.6 times.
It made no alterations to its earning forecasts, but expects the property developer’s dividends in financial years of 2017 and 2018 (FY17-18) to be lowered by 25% to 6 sen.
The research house has highlighted that no gross development value (GDV) projection has been given, but based on the land cost to GDV ratio in Singapore, the future development implies a GDV of RM12.0bil - RM15.5bil.
Kenanga Research has said in its report that the acquisition bodes well for the long-term replenishment of the group’s intentions to diversify overseas.
“For now, we opt to conservatively maintain our FY17 sales estimates at RM2.2bil,” said Kenanga Research.
The research house has maintained its “market perform” call, with a lower target price at RM2.50.
