Eco World Development Group Bhd
(Feb 5, RM2.30)
Maintain buy with unchanged target price of RM3: Eco World Development Group Bhd announced that it will form a consortium with the Employees Provident Fund (EPF) and UDA Holdings Bhd to jointly develop the RM8 billion Bukit Bintang City Centre (BBCC) project, a redevelopment of the former 19.4-acre (7.85ha) Pudu jail site.

Eco World and UDA will each own 40% in BBCC while the EPF will have a 20% stake. The consortium will acquire development rights for the prime land for RM1,013.5 million, translating into RM1,200 sq ft (psf). 

The acquisition price also represents 13% of BBCC’s gross development value (GDV) which is decent in our view. The land is likely to come with an approved plot ratio of at least eight times.

The proposed acquisition is expected to be completed by fourth quarter of calendar year 2015, though the BBCC project will take eight to 10 years to be completed.

The proposed mixed development for BBCC will comprise a retail mall, an entertainment block, strata offices, office towers, a hotel and serviced residences.

The estimated RM8 billion GDV implies average selling price of RM1,700 psf, and may offer further upside given the long development period.  BBCC will be integrated with the existing Hang Tuah Light Rail Transit station and monorail station for seamless connectivity while a new Mass Rapid Transit station is only 500m away.

We understand Eco World will rope in Mitsui Fudosan to jointly develop the shopping and retail part of BBCC. — Alliance DBS Research, Feb 5

This article first appeared in The Edge Financial Daily, on February 6, 2015.