CGSI Research said the developer’s management reiterated its 2025 sales target of RM3.5bil.
PETALING JAYA: Eco World Development Group Bhd
(EcoWorld Malaysia) is banking on the completion of ongoing land acquisitions to boost its future sales growth.
CGS International (CGSI) Research said in a report the developer’s management reiterated its 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 240.3 acres of freehold land in Iskandar Puteri, Iskandar Malaysia, earmarked for the new Eco Botanic 3 township, as well as 8.9 acres of freehold land in Kuala Langsat, Selangor, designated for high-rise apartments and commercial units,” the research house said.
EcoWorld Malaysia’s other ongoing land acquisitions include 847.3 acres of freehold land in Semenyih, Selangor, planned for a new township, as well as 1,166 acres of freehold land in Bukit Pelandok, Negri Sembilan, to be developed into the Eco Business Park 7 (EBP 7) via a joint venture.
“In total, the acquisitions boost the group’s landbank by an additional 2,263 acres and bring in incremental gross development value of RM11.9bil,” said CGSI Research.
The research house added that most of the land being acquired is near EcoWorld Malaysia’s existing projects, leading to potential margin expansion for new projects 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 Negri Sembilan, EcoWorld Malaysia is staying focused on ongoing projects due to the state’s early-stage development and greater need for infrastructure investment,” CGSI Research said.
Additionally, EcoWorld Malaysia is also building up its portfolio of investment assets, comprising commercial and industrial assets, for recurring income.
These assets would also enhance the value proposition of its nearby townships.
“We think the acquisition of unsold units in Menara Eco World, an office tower in the Bukit Bintang area of Kuala Lumpur, fits into this strategy.
“Based on our assumptions of a monthly rental rates of RM6 to RM7 per square foot (sq ft) and a net lettable area of 135,000 sq ft, the asset could generate recurring rental income of RM10mil to RM11mil a year once it is fully occupied,” the research house said.
CGSI Research reiterated an “add” call for EcoWorld Malaysia with a target price of RM2.44 per share, based on a 40% discount to the company’s RNAV of RM3.35 per share.
The research house added that re-rating catalysts include higher new sales and a better take-up of its industrial products.
