Maybank IB Research expects EWI to pay a special dividend, which works out to 37.5 sen a share, fully or partly, this year.
PETALING JAYA: Eco World International Bhd
(EWI) will likely pay a special dividend of RM900mil as it is expected to achieve its sales target of RM1.4bil in financial year 2023 (FY23).
Despite the payout being tied to the sales target, Maybank Investment Bank (Maybank IB) Research, however, anticipated EWI to pay a special dividend, which works out to 37.5 sen a share, fully or partly this year and make up for any shortfall in the following year in the event the sales target is missed.
“The FY23 sales target is achievable as EWI’s selling prices are in line with market demand after a few rounds of impairment in 2022, while supply of new homes remains limited in London,” it said in a report yesterday.
To expedite sales, EWI planned to offer incentive packages and attract foreign buyers via international marketing activities, according to the research house.
As of February, EWI had secured RM524mil in sales and reservations, which account for 37% of its FY23 sales target.
Even if EWI fails to achieve its sales goal, Maybank IB Research said the special dividend, which could be via a capital repayment, would be split and distributed between end-2023 and the following year when existing unsold stocks worth RM1.4bil, out of the RM1.8bil, are sold.
The research house said there could be another round of special distribution purely based on the clearing of RM1.8bil gross development value of unsold stock the developer planned to undertake over 2023 and 2024.
“Since EWI has already set aside working capital for the remaining projects, we think there is a high chance for EWI to pay another round of special dividend/distribution if it manages to clear all the remaining unsold stocks worth RM400mil (about RM210mil on effective stake, excluding retail lots) in FY24 if no new land bank is acquired,” Maybank IB Research added.
The forecast is irrespective of EWI, which has property development projects in the UK and Australia, posting losses over the medium term and not launching any new projects, according to the research house.
The losses EWI is posting currently will not affect its ability to pay the special distribution as its net cash stood at 7.9 sen per share as at January.
The special dividend/distribution surprise could also come from potential land sales, which could instantaneously crystallise the asset value of EWI.
Maybank IB Research has a tactical “buy” on EWI with a target price of 66 sen a share and, if a special dividend is made, will raise the book value per share to 71 sen a share.
