IOI Properties Group Berhad Largest listed property developer in Malaysia

04 August 2016 Initiate Coverage IOI Properties Group Berhad Largest listed property developer in Malaysia Initiate with NEUTRAL Target Price (TP): RM2.65 INVESTMENT HIGHLIGHTS Largest listed property developer in Malaysia Potential beneficiary of MRT 2 and High Speed Rail Sustainable income from investment properties Estimating FY16/FY17 property sales of RM1.8b/RM2.3b Outlook moderated by subdued Singapore property market Initiate with Neutral and TP of RM2.65 RETURN STATS Price (3 Aug 2016) Target Price Expected Share Price Return RM2.40 RM2.65 +10.4% Largest listed property developer in Malaysia. IOI Properties Group Berhad (IOIPG) is the largest listed property developer in Malaysia by market capitalisation. Note that its market cap of RM10.5b is higher than SPSETIA s RM8.0b (refer Figure 1 in Page 2). Potential beneficiary of MRT 2 and High Speed Rail. IOIPG is a potential beneficiary of MRT2 project as one of MRT2 stations will be located in its township project - 16 Sierra. Meanwhile, IOIPG should also benefit from the proposed Kuala Lumpur-Singapore High Speed Rail (HSR) as one of the eight stations will be located in Ayer Keroh where IOIPG owns 1,338 acres of landbank. Sustainable income from investment properties. IOIPG derives recurring income from investment properties by leasing out office building and retail space. Income from investment properties contributed to 14% to total operating profit in FY15. IOIPG is looking to increase contribution from this division to >20% in future. Meanwhile, we understand that IOIPG may look to list its investment properties as Real Estate Investment Trust (REIT). Estimating FY16/FY17 property sales of RM1.8b/RM2.3b. We believe IOIPG is on track to hit its sales target of RM1.8b for FY16, as its property launches in China received strong take up rate. For FY17, IOIPG is targeting to increase its property sales to RM2.3b supported by oversea projects in China and Singapore. Earnings wise, we estimate core net profit growth of 16%yoy to RM666m in FY16. Exposure to subdued Singapore property market. IOIPG currently has five property projects in Singapore. We expect IOIPG s property sales in Singapore to be slow due to the challenging property market. Initiate with Neutral and TP of RM2.65. We initiate coverage on IOIPG with a Neutral recommendation and target price of RM2.65 based on 40% discount to fully-diluted RNAV. While we like the company as a successful township developer with sustainable income from investment properties, its exposure to the slowing property market in Singapore would partially hurt its outlook. Expected Dividend Yield +2.5% Expected Total Return +12.9% STOCK INFO KLCI 1,648.50 Bursa / Bloomberg 5249/IOIPG MK Board / Sector Main/Properties Syariah Compliant Yes Issued shares (mil) 4,411.22 Par Value (RM) 1.00 Market cap. (RM m) 10,586.92 Price over NA 0.69 52-wk price Range RM1.79-RM2.52 Beta (against KLCI) 1.01 3-mth Avg Daily Vol 2.18m 3-mth Avg Daily Value RM5.15m Major Shareholders Vertical Capacity Sdn Bhd 50.88% Summervest Sdn Bhd 8.48% EPF 5.82% MIDF RESEARCH is a unit of MIDF AMANAH INVESTMENT BANK Kindly refer to the last page of this publication for important disclosures

Investment Statistics FYE June (RM m) 2013A 2014A 2015A 2016E 2017E Revenue 1,263 1,454 1,906 2,641 2,768 EBIT 637 1,069 1,006 857 909 PBT 741 1,120 1,130 907 981 Net Income 555 890 891 666 721 Core Net Income 516 387 574 666 721 EPS (sen) 25.6 31.9 25.8 15.1 16.3 Core EPS (sen) 23.9 13.9 16.7 15.1 16.3 Net DPS (sen) 0.0 8.0 6.0 6.0 6.5 Net Div Yield 0.0% 3.3% 2.5% 2.5% 2.7% Core PER 10.1 17.3 14.4 15.9 14.7 NTA/share 2.6 4.0 3.9 3.4 3.7 P/NTA 0.9 0.6 0.6 0.7 0.7 Core ROE 9.3% 3.5% 4.3% 4.4% 4.5% Core ROA 6.1% 2.6% 3.1% 3.1% 3.2% Source: MIDF Research 1. Investment Highlights Largest listed property developer in Malaysia. IOI Properties Group Berhad (IOIPG) is the largest listed property developer in Malaysia by market capitalisation. Total landbank of IOIPG in Malaysia is more than 10k acres, located in Johor (63%), Malacca (13%), Klang Valley (13%), and Negeri Sembilan (11%). Meanwhile, total lands for development in Singapore and China are 26 acres and 29 acres respectively. Figure 1: Market Capitalisation* Source: Bloomberg, MIDF Research *As of 26 July 2016 2

Continuing its success as a township developer. IOIPG has strong reputation as a suburban townships developer by developing Bandar Puchong Jaya in 1990 and Bandar Puteri Puchong in 1999. Meanwhile, IOIPG emulated its successful formula of building townships with the launch of township projects in Johor, Puchong South, Bangi, and Bahau Negeri Sembilan. Besides, IOIPG extends the development of IOI Resort City in Putrajaya following the acquisition of 400 acres of land in January 2016. Sustainable income from investment properties. In addition to property development business which contributed 81% to FY15 total operating profit, IOIPG also derives recurring income from investment properties by leasing out properties which comprise mainly office building in Putrajaya and retail space. Notable assets under retail space include IOI Mall in Puchong and IOI City Mall in Putrajaya. Income from investment properties contributed to 14% of total operating profit in FY15 while IOIPG is looking to increase contribution from the division to >20% in future. Meanwhile, we understand that IOIPG may look to list its investment properties as Real Estate Investment Trust (REIT) in future upon the investment properties reaching ideal size for listing. Figure 2: Operating profit breakdown by segment, MIDF Research Potential beneficiary of MRT 2 and High Speed Rail. IOIPG is a potential beneficiary of the Klang Valley Mass Rapid Transit 2 (KVMRT2) project which stretches from Sungai Buloh to Putrajaya as one of the KVMRT2 stations will be located in 16 Sierra. Note that 16 Sierra, one of IOIPG s township projects, is located on 535-acre of land in south Puchong. The proposed MRT station in 16 Sierra would improve connectivity of the township and hence should support the total GDV of the project in future. Meanwhile, IOIPG should also benefit from the proposed Kuala Lumpur-Singapore High Speed Rail (HSR) as one of its eight stations will be located in Ayer Keroh where IOIPG owns 1,338 acres of landbank. 3

Figure 3: Proposed station location of KVMRT2 Source: MRT Corp Estimating FY16/FY17 property sales of RM1.8b/RM2.3b. IOIPG achieved total property sales of RM1.78b in FY15, a 9.6%yoy decline from total property sales of RM1.97b in FY14. The drop in property sales was mainly attributed to lower property sales from Johor and China projects. Meanwhile, we believe IOIPG is on track to hit its sales target of RM1.8b for FY16 as its property launches in IOI Palm City, Xiamen China in 4QFY16 has received strong take up rate. We gather that demand and prices of properties in Xiamen is expected to remain stable as Xiamen is one of the high growth cities in China. Looking ahead, IOIPG is targeting to increase its property sales to RM2.3b in FY17 and expecting its oversea projects in China and Singapore to contribute 40% to total property sales. Figure 4: FY15 property sales breakdown by region, MIDF Research Exposure to subdued Singapore property market. IOIPG s exposure to Singapore property market is via five property projects, namely (i) Seascape @ Sentosa Cove, (ii) Cape Royale @ Sentosa Cove, (iii) Cityscape @ Farrer Park, (iv) South Beach, and (v) The Trilinq @ Jalan Lempeng. The aggregate GDV for projects in Singapore is massive at SGD 5b as most of the projects comprise high-end condominiums. However, we expect property sales to be slow going forward considering the challenging property market in Singapore. Note that Singapore property market is subdued whereby home prices have dropped for 11 consecutive quarters in June as its government is reluctant to lift property tightening measures. As such, we expect IOIPG s property sales from Singapore projects to be unexciting in the foreseeable future. 4

Figure 5: Urban Redevelopment Authority (URA) private residential property price index Source: URA, MIDF Research 2. Financial Review/Outlook Positive earnings growth. Revenue of IOIPG was on an uptrend since FY13, recording a 2-year CAGR of 23%. The growing revenue was mainly due to the ballooning revenue contribution from property development division. Meanwhile, core net income of IOIPG recorded a 2-year CAGR of 5.5% since FY13. Moreover, IOIPG registered core net earnings growth of 48% in FY15 as earnings from property development division was underpinned by higher property sales from both local and oversea projects while property investment division was supported by rental contribution from IOI City Mall that commenced operations in November 2014. Positive earnings outlook. Looking ahead, we are estimating IOIPG core net profit to grow at 16%yoy to RM666m in FY16. The forward growth is predicated on higher earnings from property development division which would be underpinned by unbilled sales of RM1.5b and higher property sales from both local and oversea projects. Besides, full year contribution from IOI City Mall should also support earnings of property investment division. Meanwhile, we also forecast higher FY17 core net income of RM721m (+8%yoy) mainly due to higher earnings from property development division. Figure 6: Revenue and core net profit, MIDF Research 5

3. Peers Comparison Healthy balance sheet. Balance sheet of IOIPG is sturdy with low net gearing of 0.07x as at FY15. Net gearing of IOIPG is the second lowest among property companies under our coverage and below peers average of 0.3x. Figure 7: Net gearing Source: Companies, MIDF Research 4. Key Risks Lower than expected property sales. Subdued consumer sentiment and tight lending rules may translate into lower property sales. Lower than expected property sales would in turn translate into lower earnings visibility for IOIPG. Slowdown in Singapore and China property markets. IOIPG is having exposures in both Singapore and China hence property sales performance of IOIPG may be impacted by subdued property market in Singapore as well as economic slowdown in China. 5. Valuation and Recommendation Initiate with Neutral and TP of RM2.65. We initiate coverage on IOIPG with a Neutral recommendation and target price of RM2.65. Our TP of RM2.65 is based on 40% discount to fully-diluted RNAV. We have applied WACC of 11% into the Discounted Cash Flow (DCF) model for ongoing projects. While we like the company as a successful township developer with sustainable income from investment properties, its exposure to the slowing property market in Singapore would partially hurt its outlook. 6

IOIPG RNAV Stake Est remaining GDV (RM m) WACC (%) Value (RM m) Klang Valley Projects 16 Sierra, South Puchong 100% 2745 11% 312 Bandar Puchong Jaya, Puchong 100% 750 11% 99 Bandar Puteri, Puchong 100% 2837 11% 338 IOI Resort City, Putrajaya 100% 19200 11% 1139 Bandar Puteri Bangi, Selangor 100% 3450 11% 411 Bandar Puteri Warisan, Sepang 100% 1083 11% 142 Johor Projects Bandar Putra Kulai, Johor 100% 1592 11% 151 Bandar Putra Segamat, Johor 100% 18 11% 3 Taman Lagenda Putra, Kulai, Johor 100% 27 11% 4 Taman Kempas Utama, Johor Bahru, Johor 100% 812 11% 102 The Platino, Johor Bahru, Johor 100% 100 11% 13 i-synergy, Senai, Kulai, Johor 100% 1720 11% 205 Other States Projects Desaria, Sungai Ara, Penang 100% 156 11% 21 Bandar IOI, Bahau, Negeri Sembilan 100% 806 11% 96 Singapore Projects South Beach, Beach Road, Singapore 50% 1667 11% 109 The Trilinq @ Jalan Lempeng, Singapore 88% 1250 11% 138 Cape Royale @ Sentosa Cove, Singapore 65% 4500 11% 270 Cityscape @ Farrer Park, Singapore 60% 1200 11% 73 Seascape @ Sentosa Cove 50% 825 11% 52 China Projects IOI Park Bay, Xiamen, PRC 100% 419 11% 55 IOI Palm City, Xiamen, PRC 100% 2170 11% 247 Unbilled sales 1500 186 Subtotal 4165 Remaining Landbank Net Surplus (RM m) Nusa Jaya 100% 0 Mukim of Pulai 100% 16 0 Segamat 100% 1254 0 Kulai Jaya 100% 467 0 Ayer Keroh 100% 1338 0 Bandar IOI, Bahau 100% 745 0 Investment Properties 100% 0 Total 4165 Shareholder Funds 15,398 Total RNAV 19,563 Enlarged share base 4,423.6 Fully-diluted RNAV per share (RM) 4.42 Discount 40% Target Price (RM) 2.65 Source: MIDF Research 7

6. Financial Summary Income Statement Balance Sheet FYE June (RM m) 2013A 2014A 2015A 2016E 2017E FYE June (RM m) 2013A 2014A 2015A 2016E 2017E Revenue Gross Profit Operating Profit Profit Before Tax Tax Profit After Tax Core Net Profit Cash Flow Statement 1,263 1,454 1,906 2,641 2,768 PPE 113 1,047 1,120 1,109 1,098 813 794 980 1,373 1,467 Land held for property dev 1,819 3,012 2,894 4,573 4,573 637 1,069 1,006 857 909 Investment properties 1,477 2,765 3,388 3,727 4,025 741 1,120 1,130 907 981 (167) (217) (230) (227) (245) 574 904 901 680 736 Interests in joint ventures Property development costs Trade and other receivables 2,176 3,856 4,155 4,155 4,155 1,799 2,117 3,356 4,779 5,014 416 492 907 699 713 516 387 574 666 721 Short term funds 60 225 706 706 706 FYE June (RM m) 2013A 2014A 2015A 2016E 2017E Deposits 99 262 762 785 809 Cash and bank balances 217 131 441 124 466 Other assets 349 818 710 845 938 Profit Before Tax 741 1,120 1,130 907 981 Total Assets 8,527 14,725 18,439 21,502 22,497 Adjustment for FV gain (40) (305) (317) - - Share capital 406 3,239 3,779 4,424 4,424 Adjustment for Interest Income (40) (36) (51) (48) (49) Reserves 1,051 11,547 12,600 13,230 13,891 Others (78) (196) (44) 28 6 Retained earnings 4,121 4,857 5,489 5,889 6,322 EBIT before working cap chgs 584 582 719 886 939 Reorganisation debit balance - (8,440) (8,440) (8,440) (8,440) Increase in property dev costs (121) (174) (493) (542) (597) Total Equity 5,678 11,301 13,538 15,202 16,296 Increase in trade and payables 132 640 590 615 615 LT borrowings 502 1,307 2,239 3,358 3,526 Tax paid (148) (224) (219) (227) (245) ST borrowings - 750 560 616 647 Others Operating CF Additions to land held for prop dev Additions to investment properties Others Investing CF Drawdown of borrowings Dividend paid Others Financing CF Change in cash Cash @ Beginning Effect of forex Cash @ End Source: MIDF Research 0.1 28 (264) (68) (68) Trade and other payables 341 1,041 1,662 1,870 1,524 448 852 334 665 644 Other liabilities 2,006 326 440 456 504 (1,145) (831) (472) (1,679) - Equity + Liabilities 8,527 14,725 18,439 21,502 22,497 (363) (397) (269) - - (291) (253) 602 (887) (207) Key Ratios 1,216 976 1,344 792 (207) FYE June 2013A 2014A 2015A 2016E 2017E 502 1,543 974 1,175 199 Revenue growth N/A 15% 31% 39% 5% (29) (15) (259) (267) (289) Core net profit growth N/A -25% 48% 16% 8% 742 (552) 629 (117) (117) Core net profit margin 41% 27% 30% 25% 26% 1,216 976 1,344 792 (207) Core EPS (sen) 24 14 17 15 16 (199) 240 1,266 (294) 365 Core ROE 9% 3% 4% 4% 4% 572 377 618 1,910 1,615 Core ROA 6% 3% 3% 3% 3% 3 1 26 - - Net gearing 0.02 0.13 0.07 0.16 0.14 377 618 1,910 1,615 1,981 Book value/share 2.6 4.0 3.9 3.4 3.7 P/BV 0.93 0.60 0.62 0.70 0.66 Dividend yield 0.0% 3.3% 2.5% 2.5% 2.7% 8

7. Background IOI Properties Group Berhad (IOIPG) is one of Malaysia s leading public-listed property developers. It was successfully listed on the Main Board of Bursa Malaysia on 15 January 2014. IOIPG is an established township developer with a track record spanning more than two decades in the property development industry. One of IOIPG s first notable housing projects was Taman Mayang (also known as SS25) in PJ, which was built in the mid of 1980s. There are four business activities of IOIPG, namely Property Development, Property Investment, Leisure and Hospitality, and Others. Figure 8: Business activities of IOIPG IOI Properties Group Berhad Property Development Property Investment Leisure & Hospitality Others, MIDF Research Figure 9: Key Milestones of IOIPG Year 2016 Milestones Acquired 399.7 acres of land in IOI Resort City, enlarging landbank in IOI Resort City to 449.7 acres. 2015 Bandar Puteri Bangi officially launched. 2014 Opened IOI City Mall shopping complex in Putrajaya. 2012 2011 Second foray into Xiamen with the purchase of 44 acres land Won the tender for a 6.03 acres land at Jalan Lempeng in Singapore Entered into a joint venture with City Developments Limited for South Beach project in Singapore. 2010 First foray into Xiamen with the successful tender of a 7.7 acres site. 2008 2007 Acquired 60% interest in Mergui Development for development of property project Cityscape. Together with Ho Bee Investment Ltd, successfully jointly tendered for land in Singapore for the development of Cape Royale and Seascape projects. 2001 Opened IOI Mall shopping complex in Bandar Putra, Kulai. 1999 Bandar Puteri Puchong, a 930-acre of mixed development was launched. 1997 The IOI Mall shopping centre situated in Bandar Puchong Jaya commenced operations. 1996 Launched development of a township known as Bandar Putra Segamat, Johor 1995 Forayed into the property market in Johor with the launch of Bandar Putra Kulai, Johor. 1990 Bandar Puchong Jaya was launched. 1985 Taman Mayang housing project was launched in Petaling Jaya., MIDF Research 9

Business Activities A. Property Development IOIPG has successfully developed comprehensive townships in the past two decades, comprising amongst others, Bandar Puteri Puchong, Bandar Puchong Jaya, Bandar Putra Segamat, and Bandar Putra Kulai. Property development projects of IOIPG are mainly located in Klang Valley and Johor. On-going projects in Klang Valley include Bandar Puchong Jaya, Bandar Puteri Puchong, 16 Sierra, IOI Resort City, Bandar Puteri Warisan @ Sepang, and Bandar Puteri @ Bangi. Meanwhile, on-going projects in Johor include Bandar Putra Kulai, Bandar Putra Segamat, Taman Kempas Utama, The Plationo, and i-synergy. IOIPG is also having presence in Negeri Sembilan by developing Bandar IOI in Bahau in 2014. In northern region of Malaysia, IOIPG is having a property project Desaria, Sungai Ara in Penang. As for regional presence, IOIPG made its inroad to Singapore in 2007. Projects in Singapore are Seascape @ Sentosa Cove, Cape Royale @ Sentosa Cove, Cityscape @ Farrer Park, South Beach, and The Trilinq @ Jalan Lempeng. IOIPG has also made its first foray to Xiamen, China in 2010. Projects in Xiamen include IOI Park Bay and IOI Palm City. Klang Valley projects are the biggest revenue contributor to IOIPG, contributing 39.7% to FY15 revenue followed by Johor (28.8%). Meanwhile, oversea projects of IOIPG in Singapore and Xiamen contributed to 25.8% to FY15 revenue in FY15 while the remaining 5.7% was contributed by projects in Penang and Negeri Sembilan. Figure 10: Property revenue breakdown by region, MIDF Research 10

Bandar Puteri Puchong Bandar Puteri Puchong is a freehold township developed on 930 acres of land since 1999. Bandar Puteri Puchong is strategically fronting the Lebuhraya Damansara Puchong (LDP) Highway. The township is linked to other network of established roads and highways. Besides, the township is also close to four new LRT stations, namely (i) Bandar Puteri, (ii) Taman Perindustrian Puchong, (iii) Pusat Bandar Puchong, and (iv) IOI Puchong Jaya Within the township is a bustling commercial centre filled with a wide variety of business and services, as well as social and recreational facilities. Figure 11: Master Plan of Bandar Puteri Puchong Bandar Puchong Jaya Bandar Puchong Jaya is one of the most established and vibrant townships in Puchong, developed by IOIPG in 1990. Prominent landmarks include the IOI Mall, IOI Business Park, IOI Boulevard, hypermarkets, commercial hubs, lifestyle hotspots and academic institutions. IOI Mall is one of the most popular shopping destinations in Puchong that is home to major chains in the retail, entertainment and F&B sectors. Meanwhile, IOI Boulevard is an integrated lifestyle office 11

and retail development. On the other hand, IOI Business Park is a major commercial business centre centrally located in the heart of Puchong. Figure 12: Master Plan of Bandar Puchong Jaya IOI Resort City IOI Resort City is master-planned to be a modern eco-city in Putrajaya, focusing on sustainable management of its natural resources and diverse developments into the foreseeable future. Facilities in IOI Resort City include Putrajaya Marriott Hotel & Spa, Palm Garden Hotel, Palm Garden Golf Club, and IOI City Mall. IOI Resort City is accessible via established network of highway, namely (i) KL-Seremban Highway (ii) South Klang Valley Expressway (SKVE) (iii) Lebuhraya Damansara-Puchong (LDP) (iv) North-South Central Link Expressway (v) Maju Expressway (MEX) 12

Figure 13: IOI Resort City Location Map Figure 14: IOI Resort City Master Plan 13

16 Sierra 16 Sierra is a 535-acre mixed development with 16 gardens of different themes. Culminating the garden experience is the Central Park that has terraced seating for outdoor celebrations and events. 16 Sierra also boasts a clubhouse The Amigo Clubhouse, which is a private retreat for 16 Sierra residents. 16 Sierra is strategically located in the southern part of Puchong (Puchong South) and close to Putrajaya and Cyberjaya. The township is connected to KL and PJ via the Maju Expressway (MEX) which has new interchange in Seri Kembangan. Figure 15: 16 Sierra Location Map Figure 16: 16 Sierra Master Plan 14

Bandar Puteri Warisan @ Sepang Bandar Puteri Warisan is a self-contained and self-sufficient township on 336 acres of land with a commercial hub complete with boutique offices, retail outlets and F&B offerings. Bandar Puteri Warisan is strategically positioned in Kota Warisan, Sepang and is 1.5km away from Xiamen University Malaysia. Located at the juncture of several established highways, the township enjoys excellent accessibility to KLIA, Cyberjaya, and Putrajaya. Figure 17: Bandar Puteri Warisan Location Map Bandar Puteri @ Bangi Bandar Puteri Bangi is a new township developed on 345 acres of land. The township is strategically located in the border of Selangor and Negeri Sembilan, with direct access to major destinations in the Klang Valley via the North- South Highway. 15

Figure 18: Bandar Puteri Bangi Location Map Bandar Putra Kulai, Johor Bandar Putra Kulai is an integrated township in Kulai Johor. It is recognised as a key landmark in the Senai-Kulai district and boasts a growing population. Bandar Putra Kulai enjoys easy access to key transport routes such as Skuaai highway, Woodlands checkpoint, North-South highway and Senai-Desaru highway. Figure 19: Bandar Putra Kulai Location Map 16

Seascape at Sentosa Cove, Singapore Seascape is a condominium development comprising two blocks of 8-storey residential apartments with basement carpark and recreational facilities. GDV for the project is estimated at SGD 1.1b. Situated on Sentosa embraced by serene waters, Seascape is an epitome of luxurious living, offering 151 exclusive waterfront units amidst the mystic charm of its natural surroundings. Figure 20: Seascape at Sentosa Cove The Trilinq at Jalan Lempeng, Singapore The Trilinq is a 6-acre 99-year Leasehold Condominium project located at Jalan Lempeng, Singapore with exceptional convenience and quick access to Clementi Town Centre and Clementi MRT Station. The Trilinq is poised for modern luxurious living with premium living spaces within the 3 high-rise towers of 33 & 36-storey residential apartments with total 755 units. GDV for the project is estimated at SGD 1b. Figure 21: The Trilinq 17

Cape Royale @ Sentosa Cove, Singapore Cape Royale is a condominium located at the water way entrance to Sentosa Cove and Marina. The iconic condominium offers 302 luxuriously appointed units. Figure 22: Cape Royale South Beach, Singapore South Beach is strategically located on Beach Road and bordering Singapore s Central Business District. South Beach consists of two 45-storey and 34-storey towers and four conserved blocks comprising hotel, residential, office and retail space with a total land area of 376,295 sq. ft. It also offers 49,000 sq. m. of lettable office space, 7,900 sq. m. of retail & food and beverage space, 2,700 sq. m. of city club, 651 hotel rooms and 189 premier residential apartments. Figure 23: South Beach 18

Cityscape at Farrer Park, Singapore Cityscape at Farrer Park Park is a freehold condominium development located at Mergui Road, Singapore. The 30- storey development is conceived as a dynamic habitat that benefits the broad scope of contemporary lifestyles. Figure 24: Cityscape at Farrer Park IOI Palm City, Xiamen, China IOI Palm City is the first mega scale urban mixed-use development project invested by IOIPG in China. IOI Palm City has been placed in the core area of Jimei New City, Xiamen.The project has occupied a total land area of hundreds of acres, whereby the projected built-up area is more than a million square meters. The 44-acre project encompasses a grand shopping mall, boutique offices, a luxury hotel, high-rise residences and villas. IOIPG launched IOI Palm City s residential phase in the last quarter of FY2015. Figure 25: IOI Palm City, Xiamen 19

B. Property Investment IOIPG leases out properties, which comprise mainly of retail space and office buildings. These properties were mostly developed by IOIPG to complement its existing township developments. Rental income from investment properties generates stable recurring income to IOIPG. Property investment portfolio of IOIPG comprises of: a) IOI City Mall in Putrajaya with net lettable space of 1.5mil sq. ft., tenanted by hypermarket, hyper-stores, Cineplex, health centres and more than 80 restaurants and cafes; b) IOI Mall in Puchong with net lettable area 863,797 sq. ft.; c) Two blocks of office buildings in Puchong Financial Corporate Centre with total net lettable area of 376,525 sq. ft.; d) IOI Mall in Johor with net lettable area of 247,863 sq. ft.; e) One IOI Square and Two IOI Square located in IOI Resort City. Both are 12-storey office towers, with approximately 440,995 sq. ft. sub lettable area; f) 104 units of office lots and retail lots located at IOI Boulevard; g) Retail space of 60,000 sq. ft. in South Beach, Singapore; and h) Office space of 530,000 sq. ft. South Beach, Singapore. Figure 26: IOI City Mall 20

Figure 27: IOI Mall Puchong C. Leisure and Hospitality Leisure and hospitality business of IOIPG comprises of: a) Marriott Putra Hotel, a five-star hotel with 380 guestrooms, 73 executive rooms, and 35 exclusive suites. The hotel is located within the IOI Resort City; b) Palm Garden Hotel, a four-star hotel with 151 guest rooms in IOI Resort City; c) Palm Garden Golf Club in IOI Resort City; d) Palm Villa Gold & Country Resort, located in Bandar Putra Kulai; e) Four Points by Sheraton Puchong; f) Le Meridien Hotel Putrajaya with 359 guestrooms; and g) South Beach Hotel Singapore, a five-star hotel with 654 guestrooms. Figure 28: Marriott Putra Hotel 21

DAILY PRICE CHART Jessica Low Jze Tieng Jessica.low@midf.com.my 03-2173 8391 Source: Bloomberg 22

MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad (23878 - X). (Bank Pelaburan) (A Participating Organisation of Bursa Malaysia Securities Berhad) DISCLOSURES AND DISCLAIMER This report has been prepared by MIDF AMANAH INVESTMENT BANK BERHAD (23878-X). It is for distribution only under such circumstances as may be permitted by applicable law. Readers should be fully aware that this report is for information purposes only. The opinions contained in this report are based on information obtained or derived from sources that we believe are reliable. MIDF AMANAH INVESTMENT BANK BERHAD makes no representation or warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained therein and it should not be relied upon as such. This report is not, and should not be construed as, an offer to buy or sell any securities or other financial instruments. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. All opinions and estimates are subject to change without notice. The research analysts will initiate, update and cease coverage solely at the discretion of MIDF AMANAH INVESTMENT BANK BERHAD. The directors, employees and representatives of MIDF AMANAH INVESTMENT BANK BERHAD may have interest in any of the securities mentioned and may benefit from the information herein. Members of the MIDF Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein This document may not be reproduced, distributed or published in any form or for any purpose. MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS STOCK RECOMMENDATIONS BUY TRADING BUY NEUTRAL SELL TRADING SELL Total return is expected to be >15% over the next 12 months. Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has been assigned due to positive newsflow. Total return is expected to be between -15% and +15% over the next 12 months. Total return is expected to be <-15% over the next 12 months. Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has been assigned due to negative newsflow. SECTOR RECOMMENDATIONS POSITIVE NEUTRAL NEGATIVE The sector is expected to outperform the overall market over the next 12 months. The sector is to perform in line with the overall market over the next 12 months. The sector is expected to underperform the overall market over the next 12 months. 23