Maybank IB said it expects EcoWorld Development to achieve stronger sales in 2HFY24 driven by the launch of two new projects in Kajang and Kulai with a combined GDV of MYR2.1b. These projects are scheduled for launch by 3Q/4QFY24. The house is maintaining its FY24 sales assumption of MYR3.7b (5.7% higher than ECW’s sales goal) and made no changes to earnings forecasts and MYR1.83 TP (on 1.1x FY24E PBV).
The house expects higher sales contribution from ECW’s Eco Rise pillar (comprising high-rise products) in FY24, given the launch of several affordable apartment projects, incl. the ongoing Sa.Young D’ Eco Botanic in Oct 2023 (>80% sold; 383 units; 1,000 sq.ft.; from MYR450k unit) and Santai D’ Eco Spring in Mar 2024 (>40% sold ; 800 units; 950sq.ft; from MYR500k/unit) as well as the upcoming Se.Duduk D’Kajang (1,220 units; 1,000 sq.ft; from MYR450k/unit), which is scheduled for launch by May-June 2024. Due to robust demand for Sa.Young D’Eco Botanic, ECW plans to launch a similar product in its upcoming Eco Botanic 3 [EC3] project. Land acquisition for EC3 is expected to be completed by end-FY24.
Replicating its success in new industrial park
Approvals for the acquisition of 404 acres of agricultural land in Kulai, Johor are expected to be obtained by 3QFY24. The land, designated for Eco Business Park VI (EBPVI; MYR1.6b GDV) will feature products similar to ECW’s other business parks, including ready-built and custom-made factories along with industrial land plots. EBPVI has garnered decent interest with over 30% of its units already reserved before the official launch in 4QFY24.
Could exceed its own FY24 sales target
ECW has secured MYR1.26b in property sales in 4MFY24. Judging from ECW’s historical track record and its pipeline of products (industrial park and affordable apartments in mature areas), Maybank expects ECW to surpass its FY24 sales goal of MYR3.5b. Maybank maintains its FY24 sales assumption of MYR3.7b. As at end-Jan 2024, ECW’s net gearing was 0.28x.
