IOI Properties Berhad Financial Analysis

Essay by Rashad871 September 2006

download word file, 6 pages 3.0

Company Overview

The IOI Group's property business are principally carried out by the Company's 69% owned listed property arm, IOI Properties Berhad. The main stream of the property business is the development activities, which contributed more than 90% of the overall property business's operating profit. Besides, the Group is also involved in property investment and most of the investment properties held by the Group are mainly in respect of retail complexes and office buildings developed as part of our township development.

Over the years, the Group has build a reputation as a reliable and successful township developer with our mainstay being the Puchong growth corridor and southern Johor.

The Group's property investment portfolio comprises mainly of retail and office space totaling approximately 1.6 million sq ft of net lettable space (FY 2004 - 1.8 million sq ft), of which about 100,000 sq ft is located in Singapore.

Property Market Analysis

The overall property market has become much more competitive and challenging as a result of some of the external factors such as rise in oil prices.

Persistently high oil prices which have decelerated economic growth and affected prices of household items significantly over the last one year has rendered house buyers becoming more cautious to commit and hence affected the sentiments which were more buoyant a year ago. That's reflected in a gradual drop in company revenues from year 2003 to 2005. Nevertheless, the improved accessibility with the opening of the Bandar Puteri interchange coupled with increased commercial activities in Bandar Puteri has attracted not only the residential buyers but also significant interests in the commercial and shop houses. It contributed to the overall profitability IOI Properties Berhad and helped the company to offset impact from lower sales of residential units.

Financial Analysis

Gross Profit Margin- The ratio is...