PETALING JAYA: The momentum from land sales for the development of data centres, together with better earnings visibility, is likely to propel Eco World Development Group Bhd
(EcoWorld) for the remainder of the company’s financial year ending Oct 31, 2025 (FY25).
The company, which recently released second-quarter results ended April 30 (2Q25) that were within market expectations, also announced a dividend of two sen per share for the quarter under review, bringing the total to three sen for its first half.
Maybank Investment Bank Research (Maybank IB), which has reiterated a “buy” call on the stock, also revised its target price to RM2.23 from RM2.21, following strong sales over the seven-month period in FY25 of RM2.99bil, mainly driven by industrial and township properties.
The sales represent 86% of the company’s estimates and 66% of the research house’s estimates.
Maybank IB has also adjusted earnings estimates for FY25 to FY27 to factor in land sale recognition assumptions related to the data centres and higher construction costs for these data centres due to the expanded sales and services tax of 6%.
It also expects dividends of seven sen compared to six sen for FY25 to FY27, while the company’s revised net asset value (RNAV) has been raised to RM3.18 from RM3.16, reflecting the new target price of 41 sen for Eco World International Bhd, in which it has a 29% stake.
“We are not overly concerned on the temporary uptick in net gearing (0.55 times in end-2Q25), given the RM1.8bil in cash and RM5.2bil in unbilled sales (1.3 times FY26 estimated revenue),” it said, adding that the 20-year lease signed by Pearl Computing for a data centre represents strategic gearing to support a broader income base starting from 4Q27.
MIDF Research expects a bumper FY26 for the company on earnings from RM1.3bil in land sales.
“We conservatively maintain our dividend forecast (six sen for FY25) as cash flow from the land sales is expected to be used for working capital purposes and to reduce net gearing,” it said.
Furthermore, it has maintained a “buy” call on the stock and revised the target price to RM2.10 from RM2.05 on a narrower RNAV discount of 14% from 16% in view of the stronger earnings outlook for FY26.
