Is Now The Time To Look At Buying IOI Properties Group Berhad (KLSE:IOIPG)?

IOI Properties Group Berhad (KLSE:IOIPG), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the KLSE. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at IOI Properties Group Berhad’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for IOI Properties Group Berhad

What's The Opportunity In IOI Properties Group Berhad?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that IOI Properties Group Berhad’s ratio of 5.42x is trading slightly below its industry peers’ ratio of 9.99x, which means if you buy IOI Properties Group Berhad today, you’d be paying a decent price for it. And if you believe that IOI Properties Group Berhad should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. In addition to this, it seems like IOI Properties Group Berhad’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from IOI Properties Group Berhad?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for IOI Properties Group Berhad, at least in the near future.

What This Means For You

Are you a shareholder? Currently, IOIPG appears to be trading around industry price multiples, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on IOIPG, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on IOIPG for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystallize your views on IOIPG should the price fluctuate below the industry PE ratio.

If you want to dive deeper into IOI Properties Group Berhad, you'd also look into what risks it is currently facing. For example, we've found that IOI Properties Group Berhad has 3 warning signs (1 is a bit unpleasant!) that deserve your attention before going any further with your analysis.

If you are no longer interested in IOI Properties Group Berhad, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.