KUALA LUMPUR: Maybank Investment Bank Research said Eco World Development Group Bhd
’s first quarter ended Jan 31, 2016 financial performance came in within its expectation but slightly below consensus.
“Eco World’s first quarter net profit was RM20.7mil accounting for 21% and 18% of our and consensus full-year estimates,” Maybank said, adding that the strong year-on-year (y-o-y) earnings growth was mainly driven by better operating margin and lower tax charges.
The research house said Eco World’s earnings before interest and tax margin improved by two percentage point y-o-y and quarter-on-quarter to 7.8% on lower administrative and marketing expenses.
As at end-Jan 2016, Eco World’s net gearing stood at 0.46 times, from 0.37 times at end-Oct 2015.
Maybank said Eco World was on track to meet its own RM3bil sales target for FY16 and had locked in RM607.8mil in property sales in 4MFY16.
“Sales should pick up strongly with the potential en bloc sale of retail spaces in Bukit Bintang City Centre (BBCC). The en bloc sale will lower the overall project risk– a positive in view of stiff competition from upcoming projects such as TRX and Bandar Malaysia.
“Eco World will soft-launch the service apartments and strata offices of BBCC by end-March 2016,” it said.
Maybank has maintained its RNAV-target price of RM1.67 and “buy” rating on Eco World. Its sales assumption for Eco World in FY16 was RM2.8bil, excluding the potential sales from its overseas projects via its associate company.
“Our RM1.67 target price is based on an unchanged 40% discount to RM2.79 RNAV. Unbilled sales stood at RM4.4bil as at January 2016 (1.2 times our FY16 forecast revenue), providing medium-term earnings visibility,” it said.
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