Maybank IB Research raises Eco World Devt target price


KUALA LUMPUR: Maybank Investment Bank Research raised its target price for Eco World Development (ECW) from 78 sen to 93 sen after its strong real estate sales stalled and an expected recovery in sales after the lockdown was lifted.

He said Monday that ECW 3QFY10 / 21 net profit of RM35mil (-65% yoy, -17% qoq) was lower than expected but in line with consensus.

On the sales front, ECW’s blocked 10MFY21 real estate sales of RM 3.1 billion were 9% above its FY21 sales target.

Elsewhere, its net debt ratio continued to improve to 0.51x at the end of 3Q21 (versus 0.55x at the end of 2Q21).

“We are adjusting our profit forecast from -9% to + 24% to take into account PNR 1 and a higher sales assumption of RM 3.5 billion for fiscal 21. Our TP is increased to 93 sen ( +15 sen) out of 0.55x the book value (PBV) for fiscal year 22, ”he said.

Maybank Research said that ECW reported 3QFY21 net profit of MYR35.1m (-65% YoY, -17% QoQ), bringing 9MFY21 net profit to RM139.9mil (-9%), accounting for 65% / 70% from Maybank Research / consensus estimates for the entire year.

The weaker than expected earnings performance was mainly driven by the imposition of stricter SOPs on project sites which resulted in slower progress billings at 3QFY21, partially offset by higher sales of completed / near-completed products .

“Net debt continued to improve to reach 0.51 times in 3QFY21 (compared to 0.55 times in 2QFY21),” he said.

Elaborating on the sales target, the research house said ECW blocked an impressive RM3.1 billion in real estate sales in 10MFY21, exceeding its own FY21 sales target of RM2.9b (Maybank Research: RM3.1b ) by 9%.

The impressive sales performance was driven by its new products which target the M40 group and first-time buyers as well as pent-up demand in a low interest rate environment.

“Management has not provided a new sales target for fiscal 21 so far. In August 2021, unbilled sales (projects in Malaysia) amounted to RM 3.7 billion, which is 1.2 times our revenue for fiscal year 22E, ”he said.


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