PETALING JAYA (Feb 27): IOI Properties Group Berhad delivered a significantly stronger financial performance for the six months ended Dec 31, 2025 (6M FY2026), driven by both operational improvements and sizeable valuation gains.
Profit before tax (PBT) surged to RM1.60 billion, more than five times higher than the RM284.5 million recorded a year earlier. The headline growth was largely attributable to a RM567.1 million fair value uplift on investment properties and a RM502.8 million gain arising from the remeasurement of its previously held stake in South Beach.
Stripping out these non-cash and one-off items, core PBT rose 87% year-on-year to RM530.6 million, reflecting stronger underlying operations. Revenue climbed 42% to RM2.01 billion, while net assets per share improved to RM4.53 as at end-December 2025.
For investors tracking commercial property in KL and the broader Klang Valley, the results underscore IOI Properties’ evolving positioning — from a traditional developer into a regional landlord with rising recurring income streams.
Development Segment: Klang Valley Remains a Key Contributor
Revenue from property development increased 33% to RM972.9 million, supported by steady construction progress across ongoing projects. Total sales for the period reached RM1 billion, with Malaysia contributing the bulk at RM803.7 million.
Within Malaysia, the Klang Valley remained the primary growth engine, generating RM512.5 million in sales, while Johor accounted for RM290.1 million. This trend reinforces the sustained demand for residential and commercial property in KL and Selangor, particularly in mature corridors supported by infrastructure and employment hubs.
Completed inventories were reduced to RM1.06 billion, reflecting healthy take-up.
Notably, after the reporting period, IOI Properties 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. The transaction highlights continued institutional appetite for industrial land in Selangor, especially sites suitable for data centres and high-value industrial property in the Klang Valley growth belt.
For market observers focused on factory in Puchong, industrial property in Subang area, and other logistics-driven corridors, the Banting deal signals strengthening land values and pricing power for well-located industrial assets.
Investment Properties: Singapore Assets Drive Recurring Income Growth
The property investment division recorded a 39% rise in revenue to RM970.9 million. Growth was supported by contributions from IOI Central Boulevard Towers, the full consolidation of South Beach Tower, and the acquisition of IOI Mall Damansara.
The segment recognised a RM567.1 million fair value gain, largely driven by rental reversion at IOI City Mall. IOI Central Boulevard Towers achieved 96% committed occupancy, while South Beach Tower reached full occupancy.
Total investment properties expanded to RM27.44 billion, reflecting the group’s growing emphasis on recurring rental income — a strategic shift that aligns with rising demand for stabilised office and retail assets across regional markets.
For investors monitoring office space in Bukit Jalil and other emerging commercial clusters in Kuala Lumpur, IOI’s increasing exposure to income-producing assets may offer insights into long-term asset repositioning and capital recycling strategies.
Hospitality and Leisure: Earnings Boost from Full Consolidation
Revenue from hospitality and leisure jumped 77% to RM401.4 million. The improvement was driven by the full consolidation of JW Marriott Singapore South Beach and the commencement of operations at Sheraton Grand Xiamen Jiamei in March 2025.
Operating profit for the segment improved significantly year-on-year, contributing to the group’s overall earnings resilience.
Research Houses Focus on Core Earnings Quality
Following the announcement, research firms broadly maintained Neutral to Bullish views, with attention centred on the sustainability of core earnings rather than headline gains.
1. Structural Shift Toward Recurring Income
Analysts from MIDF Research, HLIB Research, and UOB Kay Hian highlighted the RM530.6 million core PBT as exceeding expectations. They noted that rising contributions from Singapore office and retail assets represent a structural shift in IOI Properties’ earnings mix — reducing reliance on cyclical development profits.
2. Potential REIT Catalyst
Several research houses, including RHB Research and UOB Kay Hian, pointed to the valuation uplift at IOI City Mall as a potential precursor to a Malaysian REIT exercise, possibly targeted for mid-2026. Injecting mature retail assets could unlock embedded value while improving balance sheet metrics.
For property market participants in KL and Selangor, a potential REIT listing could reshape capital flows into retail and office space segments, including prime commercial property in KL.
3. Strategic Value of Banting Industrial Disposal
The RM740.7 million Banting land disposal was viewed positively. Analysts estimate the implied price translates to a significant premium per square foot, strengthening future earnings visibility.
More importantly, securing a global data centre operator enhances the profile of the remaining industrial landbank. This reinforces long-term demand dynamics for industrial land in Selangor, especially within expanding logistics and digital infrastructure ecosystems.
Balance Sheet and Risk Factors
As at end-December 2025, total assets stood at RM53.07 billion, while borrowings rose to RM24.94 billion, translating to net gearing of 0.78 times.
Key risks identified by analysts include:
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Foreign exchange exposure, given the growing share of Singapore-dollar denominated income and debt.
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The long-term recovery trajectory of the PRC residential market, particularly Xiamen.
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Elevated gearing levels, despite improved earnings visibility.
Market Positioning: From Domestic Developer to Regional Asset Owner
Research commentary increasingly frames IOI Properties as transitioning from a Malaysia-centric developer into a diversified regional property group with a stronger recurring income base.
With sustained activity in the Klang Valley, ongoing interest in industrial property in Subang area and factory in Puchong, and institutional appetite for large-scale industrial land in Selangor, the broader real estate landscape continues to evolve. IOI’s strategy — balancing development profits with stabilised commercial and retail assets — mirrors the direction of mature property platforms seeking long-term value creation.
