Stock Name: IOICORP
Company Name: IOI CORPORATION BHD
Research House: RHB
KUALA LUMPUR: IOI Corp shares slipped in morning trade on Monday, April 11, in line with the weaker broader market, but sentiment could had also been dampened by analysts' concerns about its Singapore venture and the government's measures to check the property market.
At 12.09pm, IOI Corp was down five sen to RM5.60 with 622,500 shares done.
The FBM KLCI lost 9.24 points to 1,548.07. Turnover was 692.87 million shares done valued at RM792.18 million. Losers beat gainers 541 to 187 while 262 stocks were unchanged.
Last Friday, April 8, IOI announced the acquisition of a 49.9% stake in Scottsdale PROPERTIES [] from City Developments Ltd (CDL) and has entered into a JV with CDL to develop the South Beach project in Singapore.
RHB Research Institute said all in, IOI will have to cough up S$816.8 million (RM1.96 billion) for its 49.9% stake.
The South Beach project is located between Raffles Hotel and Suntec City and next to the Esplanade MRT Station.
'We will impute the impact of this acquisition once the shareholder approvals have been obtained. However, our estimates suggest this acquisition would have an immediate negative earnings effect of 4% to 5% per annum from the interest expense incurred, given that earnings from this property development would not come in until 2015.
'We have, however, reduced our sum-of-parts based target price to RM5.60 (from RM5.90), after taking into account the cash outlay of RM1.96 billion. While we are glad that the price IOI paid was not excessive vs. other recent transactions, we are still concerned of the impact the Singapore government's cooling measures would have on the property market in the medium term and therefore IOI's ability to make a decent return on its investment. No change to our Underperform call on the stock,''' RHB Research said.
Company Name: IOI CORPORATION BHD
Research House: RHB
KUALA LUMPUR: IOI Corp shares slipped in morning trade on Monday, April 11, in line with the weaker broader market, but sentiment could had also been dampened by analysts' concerns about its Singapore venture and the government's measures to check the property market.
At 12.09pm, IOI Corp was down five sen to RM5.60 with 622,500 shares done.
The FBM KLCI lost 9.24 points to 1,548.07. Turnover was 692.87 million shares done valued at RM792.18 million. Losers beat gainers 541 to 187 while 262 stocks were unchanged.
Last Friday, April 8, IOI announced the acquisition of a 49.9% stake in Scottsdale PROPERTIES [] from City Developments Ltd (CDL) and has entered into a JV with CDL to develop the South Beach project in Singapore.
RHB Research Institute said all in, IOI will have to cough up S$816.8 million (RM1.96 billion) for its 49.9% stake.
The South Beach project is located between Raffles Hotel and Suntec City and next to the Esplanade MRT Station.
'We will impute the impact of this acquisition once the shareholder approvals have been obtained. However, our estimates suggest this acquisition would have an immediate negative earnings effect of 4% to 5% per annum from the interest expense incurred, given that earnings from this property development would not come in until 2015.
'We have, however, reduced our sum-of-parts based target price to RM5.60 (from RM5.90), after taking into account the cash outlay of RM1.96 billion. While we are glad that the price IOI paid was not excessive vs. other recent transactions, we are still concerned of the impact the Singapore government's cooling measures would have on the property market in the medium term and therefore IOI's ability to make a decent return on its investment. No change to our Underperform call on the stock,''' RHB Research said.
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