In a statement yesterday, EWI president and chief executive officer Datuk Teow Leong Seng(pic) said the JV with Be Living, a sister company of prominent UK contractor and developer Willmott Dixon Holdings, would open up more markets.
KUALA LUMPUR: Eco World International Bhd
(EWI), which staged a turnaround in the first half ended April 30, 2019 (H1 FY19), expects to be on track to record a substantially higher profit in the second half of FY19.
It announced on Thursday its net profit was RM10.77mil in the first half compared with a net loss of RM36.63mil in the previous corresponding period.
“Whilst a net loss was recorded in Q2 FY19 due to the completion method of earnings recognition adopted in the UK, EWI is on track to record substantially higher profit in H2 FY19 as compared to H1 FY19,” it said. Net loss was significantly reduced in Q2 FY19 to RM11.98mil compared with RM26.46mil a year ago.
EWI said the positive outlook was based on the targeted handovers of several additional residential blocks in the next few months mainly by London City Island and Embassy Gardens in the UK which will enable profits from these sales to be recognised in the upcoming quarters of FY2019.
It recorded RM586mil sales in the first seven months of FY19, a marked increase from the first four months’ sales of RM146mil.
“Its new EcoWorld London joint-venture offering products averaging from 500 pound sterling psf to 800 pound sterling psf contributed more than 50% of the sales achieved during this period. This demonstrates the resilience of the mid-mainstream London market despite weak overall homebuyers’ sentiment and Brexit uncertainties,” it said.
EWI said EcoWorld London was actively pursuing new build-to-rent (BtR) opportunities to tap into the growing institutional demand for purpose-built BtR developments in the UK and “targets to finalise the terms for a sizeable deal before the end of the year”.
“This is expected to contribute significantly towards the achievement of the two-year sales target of RM6bil set for FY19 and FY20,” it said.
EWI president and CEO Datuk Teow Leong Seng said: “The strong sales contributions by our new EcoWorld London projects over the last three months validates our strategic decision to venture into the mid-mainstream London residential sector where demand remains robust notwithstanding protracted Brexit headwinds.”
“On the financial front, we are also expecting much better results for 2H FY2019. Given the completion method of earnings recognition adopted for open market sales in the UK and Australia, profits for EWI are naturally lumpy,” he said.
Teow said as at April 30, 2019, EWI delivered 608 private units to our purchasers, the bulk of which took place in Q4 FY18 and Q1 FY19 – this accounted for the higher profits in those quarters.
“With several large residential blocks due to be handed over within the next few months, we should be able to recognise the profits from these units sold in 2H FY2019,” Teow said.
Beyond the current financial year, the group expects to deliver Wardian London, West Village and Yarra One in FY2020.
“A sizeable portion of EWI’s effective stake in the future revenue of properties sold amounting to RM6.6bil as at May 31, 2019 is therefore anticipated to be translated into its revenue and share of profits from joint ventures in FY19 and FY20,” he said.
Teow pointed EWI's efforts to build a sustainable earnings pipeline beyond FY2020 wass progressing well.
EcoWorld London launched its Verdo residential blocks in Kew Bridge in February 2019 which has achieved a healthy take-up rate of 43% to date, supported by good responses from both local and foreign homebuyers.
This positive response led to the launch of a new phase of Millbrook Park (Phase 2) in May 2019 to cater to the large number of downsizers in the matured locale.
“Our Build-to-Rent (BtR) business in the UK is also going from strength to strength and we expect this segment to be a significant driver of EcoWorld International’s growth in the UK. In this regard, we are busy negotiating with institutional investors, submitting planning applications and securing funding for a proposed deal which we aim to finalise before the end of the year.
“Along with the remaining projects planned for launch under the EcoWorld London portfolio, these efforts will not just contribute towards meeting our sales target for FY19 and FY20, it will also extend EWI’s earnings visibility well beyond FY2020 as they are targeted for completion from FY2021 onwards,” Teow said.
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