Total sales from Malaysian projects for the financial year exceeded RM3.1bil with more than RM2.2bil achieved in the second half of the year.
KUALA LUMPUR: Eco World Development Group's (EWDG) FY10/18 core net profit of RM167mIL, up 48% on-year, excluding RM96.6mil gain on disposal of a 40% stake in Eco Grandeur in FY17, was slightly below CIMB Equities Research's expectation at 94% of its forecast, but above Bloomberg consensus' at 105%.
The research house said on Friday the underperformance was due to weaker revenue and higher interest expense.
FY18 core net profit rose 48% on-year on lower selling & marketing expenses (-56% on-year), lower administrative costs (-17% on-year) and higher JV/associate contributions.
FY18 new property sales came in lower at RM3.1bil vs. RM4bil in FY17, missing its target of RM3.5bil. The #OnlyEcoWorld campaign in Jun 2018, coupled with Eco World Help2Own (EW-H2O) financing scheme in July to October 2018, contributed RM2.2bil new sales in 2HFY18.
Unbilled sales were flat at RM6.4bil on-year as at end-October 2018, translating to 2.9 times FY18 revenue.
EWDG has set a two-year sales target of RM6bil for FY19-20F, without specifying an exact sales target for each year due to challenging market conditions.
“On average, even if EWDG could secure new sales of RM3bil per annum, this target is still lower than its FY18 sales of RM3.1bil and FY17 sales of RM4bil. We believe the conservative sales target might be due to the lack of sizeable new projects (no new land bank acquisition in FY18) and a weaker property outlook.
“We cut our FY19-20F EPS by 1%-5% to factor in the higher interest cost and changes in development timeline. We lower our TP to RM1.08 as we widen our RNAV discount to 40% (from 30%) to factor in the negative impact of some measures in Budget 2019: (I) Real Property Gains Tax (RPGT) rate hike, and (ii) proposed 10% reduction in the prices of new houses,” said CIMB Research.
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