KUALA LUMPUR: Eco World Development Group Bhd
’s (EcoWorld Malaysia) Quantum pillar is expected to see positive growth in the medium term, driven by increasing demand for high-tech facilities like data centres in Malaysia, according to MIDF Research.
The developer unveiled Quantum, a new industrial revenue pillar for growth on Thursday.
The first phase of Quantum is named Quantum Edge which is 403 acres of land in Kulai, Iskandar Malaysia. Quantum Edge is currently anchored by Microsoft which bought 123 acres of land from EcoWorld Malaysia for RM402mil in June 2024 for the construction of a data centre on the land.
“We gather that EcoWorld Malaysia is targeting to secure the data centre deal for Quantum Edge by the end of this year while the structure of the deal remains fluid which may include land sales or build and lease structure,” MIDF said.
The research house opined that funding is not an issue for build and lease structure considering the healthy balance sheet of EcoWorld Malaysia with low net gearing of 0.24x.
“Overall, the setting up of Quantum pillar is expected to grow earnings contribution from EcoWorld Malaysia’s industrial property segment. Note that Eco Business Parks contributed 19% of total new property sales in the first seven months of FY24 due to the resilient demand for industrial property in Malaysia,” MIDF said.
It added that the earnings outlook for EcoWorld remains stable with steady new property sales which was largely driven by its township projects.
Meanwhile, Kenanga Research is "mildly positive" about EcoWorld Malaysia’s latest initiative, believing it could speed up the development of Eco Business Park VI in Kulai, Iskandar Malaysia, and boost both sales and margins.
“While we believe Microsoft’s data centre does not come with a high-value supply chain (and hence, we do not see its suppliers scrambling to set up shops around the data centre), the presence of Microsoft alone will add prestige to Eco Business Park VI,” it said.
Kenanga Research kept its earnings forecast for EcoWorld Malaysia unchanged, as it does not anticipate a significant impact from the company's latest initiative during the forecast period.
“We maintain our forecasts, target price of RM1.41 and underperform call,” it said.
