KUALA LUMPUR, June 21 – Public Investment Bank Bhd (PIVB) believes that EcoWorld Development Group Bhd’s (ECW) sales target is on track, given its encouraging pre-sales of about RM2.18 billion secured in seven months of the financial year 2024 (FY2024).
The investment bank said this represents 62 per cent of the group’s sales target of RM3.5 billion for the year.
“The sales were mainly driven by Iskandar Malaysia projects with RM1.33 billion sales achieved, or 61 per cent of total year-to-date sales
“Correspondingly, the group’s unbilled sales rose to RM4.03 billion from RM3.88 billion a quarter ago,” it said in a research note on Friday.
On another note, PIVB said EcoWorld International Bhd (EWI) has recorded a pre-tax loss of RM13.9 million in the second quarter (2Q FY2024) versus a pre-tax loss of RM2.1 million in the same quarter last year.
This was mainly due to lower gross profit as the stocks in the Australian projects are mostly fully sold, impairment loss on amounts owing by EcoWorld London as the joint venture continues to invest resources to procure better planning consents for its remaining projects and lower foreign exchange gains.
However, the investment bank noted that EWI has garnered RM433 million of property sales plus reserves of RM85 million adding up to a total of RM518 million for the first seven months of FY2024.
“We believe that EWI’s sales are on track as it has reduced the value of unsold completed stocks to about RM400 million.
“EWI maintains its target of generating excess cash of up to RM500 million by selling its completed stocks which would be distributed to shareholders in tranches over 2024 and 2025, with the first tranche amounting to RM144 million to be paid in July 2024,” it added.
PIVB kept its target price (TP) for ECW unchanged at RM1.50 with a ‘neutral’ stance.
Meanwhile, Kenanga Research maintained an ‘underperform’ call for ECW but raised its TP by three per cent to RM1.41 from RM1.37 previously, as the first half (1H) FY2024 results met the research firm’s expectations and is on track to meet its FY2024 sales target.
Given the buffer from strong sales in 1H FY2024, it said ECW would focus on maximising margins in 2H FY2024.
Besides, backed by a strong war chest with a net gearing of 0.24 times, the group is also on the lookout for landbank, mainly in the Klang Valley and Iskandar Malaysia, it added.
At 11.50 am, ECW’s share added 4.0 sen to RM1.62 sen with 3.77 million shares traded.
