PETALING JAYA: Analysts remain upbeat about property developer Eco World Development Group Bhd
(EcoWorld Malaysia) following several recent land deals.
The most recent deal involved the sale of a freehold industrial site in Eco Business Park I in Iskandar Malaysia, Johor, to Microsoft Payments (Malaysia) Sdn Bhd for RM693.96mil or RM115 per sq ft.
This marked EcoWorld Malaysia’s second land sale to Microsoft, following the disposal of 123.1 acres within the Quantum Edge Business Park also in Johor to the tech giant for RM402.3mil or RM75per sq ft.
CGS International Research (CGSI Research) said with the latest transaction, EcoWorld Malaysia’s total land sales to data centre operators have reached RM1.32bil across three deals in under a year.
It believed the RM115 per sq ft price is fair, considering historical land sales in Johor for data centres have ranged between RM75 and RM150 per sq ft over the past two years.
“We view this transaction positively as it accelerates EcoWorld Malaysia’s earnings growth from 2025 to 2027 and reinforces our thesis that Malaysia’s data centre space remains resilient despite concerns over US restrictions on the exports of artificial intelligence (AI) chips and the emergence of China’s DeepSeek AI, which earlier cast some doubts on long-term data centre demand,” CGSI Research said.
According to the research house, it expected the transaction to command a net profit margin of 26% to 38%, assuming additional infrastructure costs of RM30 to RM50 per sq ft to make the land ready and land cost of RM22.4 per sq ft.
“This implies a potential net profit contribution of between RM180mil and RM264mil from the sale, which accounts for 44% to 64% of our core net profit forecast for 2026,” CGSI Research said.
The research house liked EcoWorld Malaysia for its robust earnings outlook, potential monetisation of land, and compelling dividend yields of between 3.5% and 3.8% for between 2025 and 2027.
It has kept its forecasts unchanged pending further details on the land sale from management.
The research house maintained its “add” call on the counter with an unchanged target price of RM2.44 a share.
Meanwhile, another deal saw EcoWorld Malaysia taking full control of a developer in Puncak Alam by acquiring the Employees Provident Fund’s (EPF) 40% stake in the firm for RM184.1mil.
Paragon Pinnacle Sdn Bhd, is the developer of mixed residential-commercial development Eco Grandeur and integrated business park Eco Business Park V in Puncak Alam.
EcoWorld Malaysia owned a 60% stake in Paragon Pinnacle, while EPF’s wholly owned unit Tanjung Wibawa Sdn Bhd controlled 40%. Following the acquisition, EcoWorld Malaysia will fully consolidate Paragon Pinnacle’s balance sheet.
Maybank Investment Bank Research said it is positive on EcoWorld Malaysia’s latest acquisition.
“We continue to like EcoWorld Malaysia for its hands-on management, proven track record and leading position in the property sector,” the research house said.
The research house raised its revised net asset value estimate for EcoWorld Malaysia by 12 sen to RM3.04 while enhancing net profit by 1% to 4% for 2025 to 2027 following the acquisition.
It maintained a “buy” call on the stock, which is its top pick for the property sector, with a higher target price of RM2.43.
The counter closed at RM2 yesterday.
