PETALING JAYA: Analysts are upbeat on Eco World Development Group Bhd
’s (EcoWorld Malaysia) first big land sale worth RM1.013bil at Eco Business Park 7 (EBP 7) in Negri Sembilan to Tera Data Centres Malaysia, as the transaction could set a pricing benchmark for subsequent land sales to other data centres (DCs) and buoy the prices of industrial lots in the area.
This sale also signalled strong confidence in EBP 7 and should attract more industrial players, including those in the DC value chain in the future.
In a report, RHB Research said Tera’s acquisition price of RM1.013bil for 221.7 acres implied a rate of RM105 per sq ft.
This is roughly at a 30% to 40% premium to the current market price for industrial lots in Negri Sembilan.
It said the DC premium was not unusual, based on “what we have seen in Iskandar Malaysia”.
“We believe the price also included certain infrastructure works that EcoWorld Malaysia will need to deliver to Tera.
“After this transaction, the remaining net land area of the business park will only be about 300 acres,” it added.
RHB Research also said the profit margin of the land sale to Tera is comparable to the transactions made at Quantum Edge, Johor.
“We assume a pre-tax profit margin of about 30% for this deal, and management guided that the revenue recognition breakdown could be 30% and 70% in financial year 2027 (FY27) and FY28, based on conditions precedent to fulfilment, as well as the progress of infrastructure works,” said RHB Research.
It reasonably believes that the land sale has also boosted management’s confidence in undertaking the recent RM667.6mil acquisition of land in Sin Ming Avenue, Singapore.
This is as proceeds from the sale of the EBP 7 land to Tera may help fund the purchase in Singapore.
Hence, RHB Research raised EcoWorld Malaysia’s FY27 to FY28 earnings forecasts by 2% and 7% to account for the profit contribution from this land sale.
It maintained a “buy” call on the stock with an unchanged target price of RM2.66.
Benchmarking against the first half of financial year 2026 or 1H26 new property sales, CIMB Research in a note to clients said the Tera deal lifted EcoWorld Malaysia’s year-to-date gross DC-related sales to RM1.3bil versus RM626mil in FY24 and RM960mil in FY25, while propelling industrial sales to about RM2.2bil.
The research house noted that total property sales now stood at a minimum of RM4.3bil, firmly exceeding EcoWorld Malaysia’s RM4bil FY26 target.
“Crucially, this transaction further strengthens EcoWorld Malaysia’s strategic exposure to Malaysia’s industrial and DC investment cycle,” said CIMB Research.
Furthermore, it has kept a “buy” call on the stock with an unchanged target price of RM2.60, supported by FY26 to FY28 dividend yield forecasts of 4.1% to 4.6%, respectively.
According to CGS International (CGSI) Research, EcoWorld Malaysia’s recent sale transaction signalled a potential rise of DC interest in Malaysia that could underpin a multi-year sales and earnings growth story, ultimately benefiting leading industrial park developers.
Assuming a pre-tax profit margin of 20% to 30%, CGSI Research estimates that the incremental pre-tax profit of RM110mil to RM167mil from this land sale, on a 55%-stake basis, to be progressively recognised through FY27 to FY28.
CGSI Research reiterated an “add” call on EcoWorld Malaysia with an unchanged target price of RM2.63.
Meanwhile, an analyst with a local brokerage believes that the RM105 per sq ft land price appears reasonable.
This is given Malaysia’s Vision Valley 2.0’s earlier development stage.
However, it remains below recent DC land sales in more established Klang Valley locations (above RM120 per sq ft and as high as RM262 per sq ft).
Recent comparable DC land sales include IOI Properties Group Bhd’s sale of its Banting land at RM125 per sq ft and Mah Sing Group Bhd’s sale of its Southville City land at RM180 per sq ft, as both locations are only 20 to 40 kms away from EBP 7.
