Maybank IB Research sees record year for Eco World


  • Analyst Reports
  • Tuesday, 18 Feb 2020

Maybank IB Research said ECW remains confident on its RM3.3bil sales target for FY10/20.

KUALA LUMPUR: Maybank Investment Bank Research expects 2020 to be another record year for ECO WORLD Development (ECW) with strong earnings contribution from its mature projects as well as the 27%-owned Eco World International (ECWI).

It said on Tuesday ECWI’s Yarra One and West Village projects in Australia will be handed over by 2QFY20 and 4QFY20 while Wardian and a big chunk of Embassy Garden (EG)’s A05 and London City Island are expected to be recognised between 1QFY20 and 3QFY20.

These projects enjoy take-up rates of more than 75% (except for EG’s A05’s 50%).

“We think concerns about ECW’s high net gearing (0.7x in end Oct 2019) have been largely priced in. Balance sheet should improve (0.68x in FY10/20) as most of its projects are entering or are in the mature phase of development, ” it said.

Maybank IB Research said ECW remains confident on its RM3.3bil sales target for FY10/20.

It maintained its earnings forecasts and 90 sen TP (on 0.4x P/RNAV).

The research house met ECW recently. Despite the Covid-19 outbreak, management remains confident of achieving its RM3.3bil sales target for FY20 (+22% YoY) and focus will be on mid-end landed properties (RM500,000/unit) targeting first-time home buyers.

ECW has introduced a new homeownership programme called #InstaYours. This new programme is similar to Maybank’s Houzkey programme (a flexible financing scheme with zero down payment, 1% move in cost and lock in property price) and is open to both completed and properties under construction for first-time or second-time homebuyers

“We maintain our earnings forecasts. While management has refused to comment on media reports suggesting a potential merger with UEM Sunrise, the merger, if it materialises, could ease concerns about ECW’s stretched balance sheet, we think.

“ECW currently trades at 0.44x PBV/0.30x PRNAV versus industry average’s 0.51x/0.33x, ” the research house said.

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