PETALING JAYA: Eco World International Bhd (EWI) shareholders might get a potential dividend windfall as the group’s joint projects with Irish property developer Ballymore Group are completed or at the tail-end, according to Maybank Investment Bank Research.
The EWI-Ballymore joint venture (JV) projects in the UK include London City Island, Wardian and Embassy Garden, while projects in Australia include Yarra One in Melbourne and West Village in Sydney.
As these JV projects are completed or at the tail-end, Maybank IB Research in its latest report said there is no urgent need of immediate funds for future development, especially when the remaining projects in Sydney (Macquarie Park) and London (under EcoWorld London) are relatively small in gross development value (GDV).
“While management does not guide on the potential dividend payout ratio, we believe there is a high chance for EWI to reward its shareholders with a decent dividend, ” said Maybank IB Research.
According to EWI, there was pick-up in local demand for the Yarra One and West Village projects recently and the group is targeting to clear unsold units in Australia worth AU$100mil (RM318mil) by year-end or early 2022.
As for its United Kingdom projects, take-up remains slow due to the nationwide lockdown but it is expected to pick up during summer time.
Elsewhere, the negotiations with potential investors for its built-to-rent (BtR) units at Barking site (Phase 2) are ongoing but the overall process has been slower due to the lockdown in the UK. EWI intends to obtain the planning approvals by mid-2021.
Maybank IB Research has lowered its earnings forecast for EWI’s financial year ending Oct 31,2022 (FY22)/FY23 by 2% and 4% respectively, after assuming a higher dividend payout ratio of 100% for FY21 and 40% for FY22 and FY23 (from 20% previously).
In view of the potential dividend windfall (with an estimated dividend yield of 12.9%), the research unit has upgraded EWI to a “buy” (from a “hold” previously), with a higher target price of 61 sen, from 46 sen previously, based on a higher 0.5 times FY21 price-to-book value.