IGBB: Strong Operational Performance Meets Expectations Amidst Robust Rental Growth

The latest third quarter financial results for the period ending December 2025 (3QFY25) have come in within expectations, with net profit recording a robust increase. The period saw a net profit of RM97.5 million, marking a significant rise of 32.3% year-on-year (YoY) and 29.5% quarter-on-quarter (QoQ).

However, year-to-date (YTD) Group net profit stood at RM261.9 million, a 21.6% YoY decrease, which accounts for approximately 74% of full-year estimates. This YTD decline is primarily attributed to a substantial land sale gain recognized in 1QFY24, which had boosted profits by approximately RM108.7 million in the prior year, creating a higher comparative base.

Performance Review

The positive performance in 3QFY25 was largely driven by stronger contributions from the property development and various other business divisions. The retail assets segment, under IGBREIT, demonstrated significant growth, with revenue rising 6.4% YoY to RM165.2 million in 3QFY25. YTD total revenue for retail assets reached RM496.7 million, up 6.2% YoY. Concurrently, net property income (NPI) for retail assets increased 8.6% YoY to RM377.9 million.

This growth in both revenue and NPI was predominantly fueled by higher rental income achieved during the quarter. Key properties such as Mid Valley Megamall and The Gardens Mall maintained impressive occupancy rates of 99.8% and 98.6% respectively, coupled with positive rental reversions that saw average retail leases improving in the mid-single digits. Average gross monthly rental income also showed an upward trend, particularly for Mid Valley Megamall (RM18.55psf) and The Gardens Mall (RM15.94psf).

The commercial division, represented by IGB Commercial REIT, also reported robust growth. Gross revenue increased 11.6% YoY to RM64.2 million, and NPI saw an 11.8% YoY rise to RM37.6 million in 3QFY25. For the nine-month period, total revenue for the commercial division climbed 11.9% YoY to RM191.1 million, with NPI increasing 12.0% YoY to RM114.6 million. This improved performance was due to higher rental income, supported by increased occupancy rates and higher average rental rates. The portfolio occupancy rate remained steady at around 92%, with average rental rates improving to RM6.53psf in 3QFY25.

The hotel segment also contributed positively, with revenue rising 3% YoY to RM95.4 million, and profit before tax (PBT) increasing 4.4% YoY to RM28.6 million. This was a result of higher occupancy rates and an improvement in the average room rate.

Future Outlook and Strategic Initiatives

PublicInvest Research maintains its earnings estimates and a “Neutral” call on the company, with the target price (TP) remaining unchanged at RM2.95, representing approximately a 10% discount to its book value. The Group continues to engage in strategic landbanking activities, having recently acquired 19.7 acres adjacent to Mid Valley Southkey, 12.7 acres in Section 13, Petaling Jaya, and a 24.3-acre site for Movie Animation Parks Studios in Bandar Meru Raya. These acquisitions signal continued focus on future property development and expansion.