IGB Corp Bhd has seen steady profit after tax (PAT) growth since 2004. For FY2013 to FY2016, the group’s PAT registered a three-year compound annual growth rate (CAGR) of 13.8%, supported by its property investments and hotel operations.
For FY2016, it reported PAT of RM297.99 million, up 37.38% from RM216.9 million the previous year, even as revenue dipped 1% to RM1.15 billion from RM1.17 billion.
IGB saw lower contributions from its property development and property investment (commercial) divisions during the year, but that was mitigated by higher contributions from the property investment (retail), hotels and investment divisions.
The property development division was hit by the soft market sentiment in 2016 as potential buyers held off purchases amid tighter lending rules, high cost of living and weaker job prospects, according to its 2016 annual report.
IGB completed two developments during the year, Three28 Tun Razak and Park Manor, which saw take-up rates of 96% and 22% respectively as at end-2016.
The property investment (commercial) segment was also affected by the soft market, amid the oversupply of office space in the Klang Valley, but saw a slight increase in occupation to 89% in 2016, from 87% a year earlier.
The group managed to replace 60,300 sq ft of space as at end-2016, out of the 332,942 sq ft that was vacant as at end-2015.
IGB said it offered a range of incentives, such as longer rent-free periods, and sought longer-term tenancies across a range of businesses and industries to reduce tenant concentration risk.
The hotel division saw positive growth during the quarter, supported by the opening of four hotels in 2015, namely Cititel Express Ipoh, Cititel Express Penang, The Wembley Penang and the Tank Stream Sydney.
During 2016, the group restructured its portfolio of hospitality assets, selling off Renaissance Kuala Lumpur Hotel, Cititel Express Kuala Lumpur and Micasa Hotel Apartments, Yangon.
The property investment (retail) segment also saw growth as consumer sentiment improved from a low in 2015.
The group carried out asset enhancement initiatives (AEI) at Mid Valley Megamall, while The Gardens Mall saw a reconfiguration of retail space, which has driven sales in fashion, jewellery and watches.
Its major shareholder Goldis Bhd, which holds a 73.43% stake in IGB, has made several attempts to take the company private.
The first attempt was in 2014, when Goldis, which then held 32.64% in IGB, offered to purchase the shares it did not own at RM2.88 per share. Goldis ended up with 73.32% of IGB’s shares.
The plan was to amalgamate Goldis and IGB, and make the latter its wholly-owned subsidiary to create a more efficient operating structure and eliminate the overlap of administrative efforts and costs.
Upon completion of the exercise, IGB would have been delisted and Goldis would have seen a name change to IGB Bhd.
In February this year, Goldis launched another takeover offer at RM3 per share, which was deemed unattractive by Public Investment Bank Bhd as it undervalues IGB’s 51.1% stake in IGB Real Estate Investment Trust (IGB REIT).
The acquirer had offered IGB’s shareholders three options for IGB’s shares — cash only, cash plus Goldis shares at a 30:70 ratio respectively, or cash plus new redeemable convertible cumulative preference shares at a 20:80 ratio.
Shareholders holding less than 100 shares were restricted to the cash-only option.
In June, Goldis revised its offer by offering the three options to all shareholders, including those with less than 100 shares. It also adjusted the proportion of cash to new RCCPS to a 12:88 ratio.
The exercise is expected to be completed in the fourth quarter of 2017.
Meanwhile, IGB expects another slow year in 2017 as consumers continue to be impacted by rising costs, a slowdown in growth and weakening employment prospects.
While the group said it will not be spared from the headwinds, it added that its move to diversify its portfolio, expand overseas and grow its recurring income base will support its growth in the future.