CIMB Investment Bank Bhd has maintained its HOLD call on Eco World Development Group Bhd with a slightly higher target price of RM2.32 from RM2.30, while MBSB Investment Bank Bhd (MBSB Research) reiterated its NEUTRAL call with an unchanged target price of RM2.19 following the developer’s latest land acquisition in Semenyih.
Both research houses noted that Eco World’s move to acquire 22.7 acres of freehold commercial land adjacent to its upcoming Eco Radiance township is a strategic expansion that strengthens its foothold in the growing South Klang Valley corridor. The RM82.2 million purchase by its 81%-owned subsidiary, Mutiara Balau Sdn Bhd, from Boustead Balau Sdn Bhd, will bring the total size of Eco Radiance to 870 acres with a combined gross development value (GDV) of RM5.16 billion.
MBSB Research viewed the expansion positively as the new land, fronting the main road in Semenyih, offers high development potential for commercial projects including serviced apartments and Eco World’s “Duduk” series. The acquisition price of RM83 per square foot is considerably higher than the RM20 per square foot for the previous land purchase but is justified given its commercial zoning and prime frontage. The firm expects the land deal, due for completion in the first quarter of 2026, to marginally raise Eco World’s net gearing to 0.55 times from 0.53 times in the third quarter of FY2025.
CIMB Securities shared a similar view, calling the land cost “fair” based on a land cost-to-incremental GDV ratio of 14.7%, lower than the earlier 16.1% ratio for Eco Radiance’s original landbank. The additional land is expected to enhance Eco Radiance’s commercial appeal, providing convenience for nearby Eco Forest residents who currently travel over 10 minutes to reach existing commercial hubs. CIMB also noted that the acquisition will likely be funded by proceeds from Eco World’s RM800 million perpetual sukuk issued in August 2025, with 90% of payment expected in FY2026.
The commercial component is set to be the first launch under the Eco Radiance development, targeted for the first half of 2026. CIMB raised its FY2026 and FY2027 revenue and core net profit estimates by 1% and 8%, and by 1% and 11%, respectively, citing earlier contributions from the commercial development which are expected to yield higher EBITDA margins.
While both research firms acknowledged Eco World’s proactive landbanking strategy and strong development pipeline, they maintained their cautious stance on valuation. MBSB highlighted that the stock trades at a 25% premium to its latest net tangible assets of RM1.70 per share, suggesting limited upside in the near term despite solid fundamentals and growing sales momentum.
As of 10.48 am, Eco World’s stock price noted a slight increase of 0.47%, to RM2.14.
