EcoWorld’s 1QFY23 earnings were slightly below expectation says MIDF in its analysis of the latest earning, core net income of RM56.6m came in within consensus expectation but slightly below the research houses, making up 22.5% and 19% of consensus and full-year forecast. The slight negative deviation could be attributed to the lower-than-expected contribution from joint venture (JV) in 1QFY23.
On a sequential basis, 1QFY23 core net earnings were lower at RM56.6m (-31.1%qoq) partly due to lower contribution from JV (-40%qoq). The weaker contribution from JV was mainly due to the substantial completion of several phases of Eco Grandeur and Eco Ardence in 4QFY22. On yearly basis, 1QFY23 core net earnings were lower (-8%yoy), in line with lower topline (-9.1%yoy) mainly due to slower progress billing. Work progress in the construction site was slower in 1QFY23 due to the Chinese New Year break in January 2023. Besides, the lower earnings were also owing to higher finance costs (+24.9%yoy) due to the higher financing rate.
EcoWorld recorded new sales of RM1.346b in the first four months of FY23, on track to meet the new sales target of RM3.5b for FY23. New sales were mainly driven by sales of industrial products as it makes up 59% of total new sales. Notably, EcoWorld inked a strategic sale of 92 acres of industrial lands at Eco-Business Parks II in Iskandar Malaysia to Haitian Group. Meanwhile, the sale of residential properties contributed to 41% of total new sales.
Meanwhile, future revenue increased to RM4.031b as at Feb 2023 from RM3.577b as at October 2022. Maintain BUY with an unchanged TP of RM0.87. MIDF revises its FY23F earnings by -4.3% to factor in lower contribution from JV and makes no changes to its FY24 earnings forecast.
