PETALING JAYA: The higher remuneration for the civil service and increased inbound tourist numbers could benefit IOI Properties Group Bhd's (IOIProp) prospects.
Hong Leong Investment Bank Research (HLIB Research) noted the proposed 13% increase in the remuneration of civil servants and the raising of the minimum wage to RM2,000 a month from December 2024 onwards would benefit IOIProp's residential and commercial property business, especially around Putrajaya.
"This meaningful hike in salary will boost the spending power of civil servants in Putrajaya," the research house stated in a report on the property group.
It noted the higher wage levels augur well for residential and retail demand in the group's IOI Resort City township in Putrajaya.
Its mall there, IOI City Mall, which is the largest in the country with 2.4 million sq ft of net lettable area (NLA), has further expansion plans over Phase 3 and Phase 4.
Upon completion of Phase 3, the mall's NLA will increase to 3.5 million sq ft.
The mall also has plans to include a purpose-built concert hall targeted at a younger crowd and a 10-acre central park.
The research report did not state when the expansion would be undertaken or completed, but news reports noted that construction work for Phase 3 is scheduled to start this year and be completed by 2029.
HLIB Research added the 32.5% on-year increase in inbound tourist numbers recorded in the first quarter of this year to 5.8 million would also boost IOIProp's hotel occupancy rates, more so with the group's hotel rooms set to expand by 64% to 3,075 rooms this year from 1,876 at present.
"IOIProp's new asset, W Hotel KL, is currently doing very well and enjoying occupancy rates above 90% and average room rates of above RM1,200," the research house said.
HLIB Research noted the proposed light rail transit project in Langkawi could present a strategic growth opportunity for IOIProp, which intends to invest in a beachfront resort with a shopping mall and convention centre on the island.
"These developments, along with the impending unlocking of value of IOIProp's Singapore assets support a positive outlook and a 'buy' call, with an unchanged target price of RM3.30 a share based on a 45% discount to the group's revised net asset value of RM6," the research house said.
HLIB Research said IOIProp is now on the cusp of unleashing the value from its assets in Singapore, namely IOI Central Boulevard and Marina View Residences developments.