IOI Properties 6M FY2026 PBT surges to RM1.60b on valuation gains; core earnings up 87%

PETALING JAYA (Feb 27): IOI Properties Group Bhd (IOI Properties) reported a sharp increase in earnings for the six months ended Dec 31, 2025 (6M FY2026), with profit before tax (PBT) rising more than fivefold to RM1.60 billion, from RM284.5 million a year earlier.

The increase was primarily driven by:

*RM567.1 million fair value gain on investment properties; and

*RM502.8 million gain on remeasurement of a previously held interest in a joint venture (South Beach).

Excluding these non-cash and non-operational items, underlying PBT rose 87% year-on-year to RM530.6 million, from RM284.5 million previously—a figure analysts view as a better reflection of operational performance. Revenue increased 42% to RM2.01 billion, from RM1.42 billion in 6M FY2025, while net assets per share improved to RM4.53, from RM4.44 as at June 30, 2025.

Segment performance

All three core segments recorded higher revenue year-on-year.

Property development

Revenue rose 33% to RM972.9 million, supported by progressive revenue recognition across ongoing projects. Sales for the period totalled RM1 billion, with contributions from:

*Malaysia: RM803.7 million (80%)

*People's Republic of China (PRC): RM134.8 million (14%)

*Singapore: RM63.8 million (6%)

Within Malaysia, Klang Valley contributed RM512.5 million, while Johor recorded RM290.1 million. Completed inventories were reduced by RM203.2 million to RM1.06 billion. Subsequent to the reporting period, the group entered into an agreement to dispose 136 acres at IOI Industrial Park @ Banting for RM740.7 million to Bridge Data Centres Malaysia VII Sdn Bhd.

Property investment

Revenue increased 39% to RM970.9 million, supported by contributions from IOI Central Boulevard Towers (Singapore), the full consolidation of South Beach Tower (effective Sept 1, 2025), and IOI Mall Damansara (acquired December 2024).

The segment recorded a RM567.1 million fair value gain, largely attributed to rental reversion at IOI City Mall. IOI Central Boulevard Towers secured 96% committed occupancy, while South Beach Tower achieved 100% committed occupancy, according to the group. Investment properties expanded to RM27.44 billion, from RM22.25 billion as at June 30, 2025.

Hospitality and leisure

Revenue rose 77% to RM401.4 million, driven by the full consolidation of JW Marriott Singapore South Beach and the commencement of operations at Sheraton Grand Xiamen Jiamei (March 2025). Operating profit for the segment increased significantly year-on-year.

Research house insights

Following the announcement, major research houses issued flash notes broadly describing the sentiment as Neutral to Bullish, focusing on earnings quality rather than headline gains.

1) Core earnings and recurring income shift

Research houses such as MIDF Research and HLIB Research have largely stripped out the RM1.07 billion in non-cash gains to assess operational health. MIDF Research noted that the RM530.6 million core PBT exceeded its expectations. Analysts from UOB Kay Hian and HLIB Research highlighted the growing Singapore contribution as a "structural shift" in IOI Properties earnings profile, moving the group toward a higher recurring income base anchored by Singapore office and retail assets.

2) REIT catalyst under discussion

Several research notes, including those from RHB Research and UOB Kay Hian, pointed to the valuation uplift at IOI City Mall as a potential precursor to a REIT exercise. UOB Kay Hian specifically noted that a Malaysian REIT listing, targeted for June 2026, could serve as a major catalyst for share price re-rating. Analysts suggest that injecting assets like IOI City Mall and IOI Mall Puchong could unlock embedded value and significantly ease balance sheet gearing.

3) Banting industrial land sale seen as strategic

The RM740.7 million disposal in Banting was viewed positively by TA Securities and HLIB Research. TA Securities estimated the transaction implies a selling price of RM125 per sq ft, a significant premium that could boost FY2027 net profit by up to 42%. HLIB Research noted that securing Bridge Data Centres as a flagship occupier enhances the marketability and pricing power of the remaining 186-acre industrial landbank.

4) Balance sheet and key risks

Total assets stood at RM53.07 billion, with borrowings increasing to RM24.94 billion (Net gearing: 0.78 times). Kenanga Research maintained a cautious stance on the group's high gearing despite the better earnings visibility. Key risks flagged across the board include:

*Foreign exchange exposure: Due to increasing SGD-denominated earnings and debt.

*PRC residential market: Kenanga and RHB remain cautious on the long-term recovery of the Xiamen market despite improved recent sales.

Market positioning

Research commentary broadly frames IOI Properties as transitioning from a Malaysia-centric developer to a regional property group. HLIB Research currently maintains a Buy rating with a target price of RM4.15, citing the narrowing valuation gap as REIT catalysts materialise.

Editor’s note:

*Data source: Based on official IOI Properties Group Bhd 6M FY2026 filings and market data as of Feb 27, 2026.

*No advice: Analyst views (RHB, Maybank IB, Kenanga, HLIB, UOB Kay Hian) are for informational purposes only; they do not constitute financial advice.

*Forward-looking: Project timelines and "REIT optionality" are based on current management guidance and research house projections; these remain subject to market conditions and regulatory approvals.

*Due diligence: Readers are advised to perform independent research and consult professional advisors before making investment decisions.

Unlock Malaysia’s shifting industrial map. Track where new housing is emerging as talents converge around I4.0 industrial parks across Peninsular Malaysia. Download the Industrial Special Report now.