Property circles will soon know the name Lee Yeow Seng BY WONG WEI-SHEN

by **Cals** Mon 13 Jan 2014, 01:58

Published: Saturday January 11, 2014 MYT 12:00:00 AM
Updated: Saturday January 11, 2014 MYT 8:42:16 AM
Property circles will soon know the name Lee Yeow Seng
BY WONG WEI-SHEN
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Fresh faced and just 35 years old, all eyes are now on Yeow Seng and how he will propel IOI Properties to greater heights.
LEE Yeow Seng, a name that the property scene will soon know very well, has recently shot into the limelight following his appointment as chief executive officer ofIOI Properties Group Bhd.
Unlike his older brother Datuk Lee Yeow Chor, newly appointed chief executive officer of IOI Corp Bhd who is already a familiar face in the plantation scene, Yeow Seng, who was roped into IOI Corp Bhd back in 2008, has been kept behind the scenes up until news broke of IOI Properties’ relisting.
Fresh faced and just 35 years of age, all eyes are now on Yeow Seng and how he will propel IOI Properties to greater heights. With the listing ceremony only a couple of days away, analysts anticipate the stock’s re-entrance to the Main Market of Bursa Malaysia to do well.
Yeow Seng has quite a tall order to meet. With a landbank of 10,000 acres to work with, he has set an ambitious sales target of RM2.5bil to RM3bil in less than two years’ time, a target that is seen as too aggressive by some.
“His appointment by his father signals Yeow Seng’s readiness to do the job. He has been shown the ropes on how the group’s businesses are run since joining IOI Corp in 2008,” an industry observer says.
Not only do Yeow Chor and Yeow Seng’s appointments mark the conclusion of the demerger exercise, which sees the separation of IOI Properties from IOI Corp, it is also part of IOI Group founder Tan Sri Lee Shin Cheng’s succession plan.
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While Shin Cheng has now taken a backseat, it is definitely not a sign that he will be retiring soon.
“I am still very healthy, strong and handsome. I can work for at least another 10 years. IOI Corp and IOI Properties were both founded by me. I want to see them grow bigger and become even more successful companies,” he jokingly told the media at a recent briefing.
Although the decision-making process is now in the hands of his two sons, Shin Cheng says he will continue to monitor and assist them closely. As executive chairman of both companies, he will still be hands-on in assisting Yeow Chor andYeow Seng in bettering the two companies.
But Yeow Seng’s appointment comes at a time when the property market is not at its peak. In fact, a lot of unrest and uncertainty have arisen among from the cooling measures introduced by the Government during Budget 2014.
Measures such as the hike in real property gains tax and the abolishment of the developers interest-bearing scheme have dampened sentiments from both developers and property investors alike.
Analysts are already expecting a setback for sales momentum to occur this year. This will only prove a challenge for Yeow Seng to meet his targeted sales of RM2.5bil to RM3bil by the financial year ending June 30, 2015.
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“If he can get through this subdued year, it will be proof that he is more than capable in helming the property business,” says an analyst.

The demerger deal
The demerger exercise sees a clear segregation in the group’s plantation and property businesses, with Yeow Chor helming the first and Yeow Seng the latter. After the demerger, IOI Corp will become a pure integrated palm oil player.
The exercise allows both companies to fully focus on the respective businesses.
“With this demerger, IOI Corp will become one of the purest integrated plantation plays listed on Bursa Malaysia and could regain its throne as ‘the’ premium big-cap plantation player,” says RHB Research analyst Hoe Lee Leng.
Many research houses have adjusted their target prices for IOI Corp downwards to reflect the demerger.
Yeow Chor intends to maintain IOI Corp’s previous dividend per share, indicating that the company will have to increase its dividend payout, as earnings will be reduced due to the removal of property contribution, which accounts for 30% to 35% of its earnings previously.
He adds that the company will be more aggressive in sourcing for more plantation land locally as well as overseas in countries such as Indonesia.
“Re-rating catalysts to look out for include further acquisition of significant tracts of brownfield or greenfield hectarage and CPO (crude palm oil) prices trend up higher than expected due to supply related issues like unfavourable weather,” says Alliance Research’s Arhnue Tan.
IOI Properties will be listed by way of distribution-in-specie and a restricted offer for sale (ROS) involving 3.24 billion shares to shareholders of IOI Corp.
The exercise entails the distribution-in-specie of one IOI Properties share for every three IOI Corp shares, and an ROS of one IOI Properties share for every six IOI Corp shares.
An in-specie distribution is the distribution of an asset in its present form, rather than selling it and distributing the cash.
Each IOI Properties share is priced at RM1.76 under the ROS, representing a 30% discount to the reference price of RM2.51.

Property play
IOI Properties was once listed on the Main Market of Bursa Malaysia, but subsequently privatised in 2009 to pursue various landbank acquisitions. Analysts say the stock was also fairly illiquid back then.
But during those four years, the company did not stay silent. Instead it aggressively expanded locally, as well as to the overseas markets, namely in Singapore and China.
IOI Properties made its first mark in Xiamen, China, a sub-provincial city of Fujian province, not too far away from Shin Cheng’s ancestral home in Yongchun, Quanzhou in Fujian province.
IOI Park Bay in Xiamen, a mixed development comprising a shopping mall, boutique offices, a five-star luxury hotel and luxury high-rise residences, is set to be complete in 2018.
RHB Research analyst Leong Kok Wen says its overseas projects give IOI Properties the flexibility to be responsive to changes in market conditions.
“The debut of the Xiamen project was successful, with all 480 units launched in September 2013 taken up. Earnings from China are expected to kick in from financial year ending June 30, 2014 onwards.
Upon listing, IOI Properties is set to have a market capitalisation of at least RM8.31bil, making it second to UEM Sunrise Bhd by market value.
Although shareholding of the major shareholders post listing has yet to be confirmed, analysts anticipate that Shin Cheng’s shareholding in IOI Properties to likely be around 45%.
Some say that IOI Properties would provide investors with an alternative to S P Setia Bhd.
Others argue that it would depend if valuations are cheap enough to be able to choose one over the other.
IOI Properties’ ongoing and future developments for the next three years have a gross development value (GDV) of RM10bil in Malaysia, S$3bil in Singapore and five billion yuan in China.