Maybank IB said it was adjusting its earnings forecast for EcoWorld for the financial year ending Oct 31, 2027 upwards by 0.5% to incorporate the new Semenyih land.
PETALING JAYA: Analysts are positive about Eco World Development Group Bhd
’s (EcoWorld) latest commercial land acquisition in Semenyih, Selangor, given its fair pricing of RM83 per square foot (psf).
More importantly, the land, earmarked for shops and serviced apartments, will enhance the appeal of its upcoming Eco Radiance township, Maybank Investment Bank Research (Maybank IB) said in a report.
The research house is positive about the land purchase, given its fair pricing compared with asking prices of between RM78psf to RM270psf in the Semenyih area.
“The higher asking prices elsewhere are likely due to smaller parcel sizes.
“In our view, the new land, which is earmarked for the development of commercial shops and serviced apartments, will strengthen the appeal of the upcoming Eco Radiance township, a strategy similar to the commercial components of Eco Ardence and Eco Grandeur.”
The estimated gross development value (GDV) for the new land is RM560mil, bringing total GDV for Eco Radiance to RM5.2bil, Maybank IB noted.
The research house also said it was adjusting its earnings forecast for EcoWorld for the financial year ending Oct 31, 2027 (FY27) upwards by 0.5% to incorporate the new Semenyih land, assuming a pre-tax margin of 18% and an eight-year development period.
The commercial project is slated for launch by mid-2026 and the new land is expected to lift its revalued net asset value (RNAV) by one sen.
Maybank IB noted that EcoWorld continues to explore new opportunities, particularly in industrial land in the Johor-Singapore Special Economic Zone.
Every additional RM500mil in GDV is estimated to raise the group’s RNAV per share by 1.3 sen, assuming a 20% pretax margin, it added.
Meanwhile, MBSB Research said it made no changes to its earnings forecasts for EcoWorld for FY25, FY26, and FY27.
The research house said its target price for EcoWorld was maintained at RM2.19, based on an RNAV discount of 10%.
“We include RNAV contribution from the latest land acquisition and update our RNAV valuation.
“While we see positive earnings prospects for EcoWorld due to earnings recognition from land sales, the valuation for the group is rich as it is trading at a 25% premium to the latest net tangible assets of RM1.70 per share.
“Hence, we maintain our ‘neutral’ call on EcoWorld,” MBSB Research said.
The counter closed at RM2.09 in yesterday’s trading.
MBSB Research noted that the acquisition price of RM83 psf for the new land was higher than the RM20 psf for the previous land acquisition for Eco Radiance as the new land is designated as commercial land and fronting a main road, which offers higher development potential for the the developer.
EcoWorld is acquiring the 22.73 acres of freehold commercial land for RM82.19mil in cash.
