PETALING JAYA: Eco World Development Group Bhd
is banking on the completion of ongoing land acquisitions to boost future sales growth.
CGS International (CGSI) Research in a report said the management reiterated their financial year 2025 sales target of RM3.5bil, while highlighting that completion of ongoing land acquisitions should boost future sales and contribute to incremental revalued net asset value (RNAV).
“This includes a 240.3 acres of freehold land in Iskandar Puteri, Iskandar Malaysia, earmarked for a new township, Eco Botanic 3, as well as an 8.9 acres of freehold land in Kuala Langsat, Klang Valley, designated for high-rise apartments and commercial units,” the research house said.
Eco World’s other ongoing land acquisitions also include an 847.3 acres of freehold land in Semenyih, Klang Valley, planned for a new township, and a 1,166 acres of freehold land in Bukit Pelandok, Negeri Sembilan, to be developed into Eco Business Park (EBP) 7 via a joint venture.
“In total, these land acquisitions boost the group’s landbank by an additional 2,263 acres and bring in incremental gross development value of RM11.9bil,” CGSI Research.
The research outfit noted that most of these lands are near Eco World’s existing projects, leading to potential margin expansions by leveraging established commercial areas and amenities.
“Management expects the land acquisition for EBP 7 to be completed in the next six months. While open to expansion in Negeri Sembilan, Eco World stays focused on ongoing projects due to the state’s early-stage development and greater need for infrastructure investment,” CGSI Research said.
Additionally, Eco World is also building up a portfolio of investment assets, comprising of commercial and industrial assets, for recurring income. These assets will also enhance the value proposition of its nearby townships.
“We think the acquisition of unsold units of Menara Eco World, an office tower in Bukit Bintang City Centre, fits into this strategy. Based on our assumptions of a monthly rental of RM6 to RM7 per sq ft and a net lettable area of 135k sq ft, the asset could generate recurring rental income of RM10mil to RM11mil per annum once it is fully occupied,” the research house said.
CGSI Research reiterated an “add” call for Eco World with a target price of RM2.44 based on a 40% discount to its RNAV of RM3.35 per share.
The research house added that re-rating catalysts are higher new sales and better take-up of its industrial products, while downside risks are delays in project launches and decline in sales growth.
