KUALA LUMPUR (Sept 14): Eco World Development Group Bhd (EcoWorld) recorded a 76% year-on-year jump in net profit for its nine months ended July 31, 2017 (9MFY17), to RM175.94 million from RM99.93 million, thanks largely to a gain from the dilution of interest in then wholly-owned Paragon Pinnacle Sdn Bhd in the first quarter of the year.
Topline for the period also came in 12% higher at RM2.03 billion compared with RM1.81 billion a year ago.
The property developer achieved total sales of RM772 million in the third quarter ended July 31 (3QFY17), 40% stronger than the RM552 million it posted in 2QFY17.
As at end-August, EcoWorld said unbilled sales stood at RM6.22 billion while total property sales amounted to RM2.39 billion, up 9% from the RM2.2 billion it recorded between January and August last year.
In 3QFY17, its net profit came in at RM26.09 million compared with RM44.58 million a year ago, while revenue grew 5% to RM762.92 million from RM727.34 million.
The third quarter earnings were lower due to higher finance costs incurred from new term loans that were secured to fund its future investments in joint-venture (JV) and associate companies. Finance cost came in at RM21.34 million compared with RM7.53 million a year ago.
Initial losses incurred by its JV companies — namely EcoWorld International Bhd (EWI), Eco Grandeur, Eco Ardence and Bukit Bintang City Centre, pending the commencement of property development profit recognition — also led to the lower earnings, it said.
Revenue for the quarter was stronger, it said, thanks to higher percentage of completion and higher number of sold units having attained the criteria for profit recognition.
But gross profit margin was lower due to the commencement of income recognition from lower margin products (Rumah Mampu Milik and Rumah Selangorku) launched last year, in compliance with the government's regulations on affordable housing.
EcoWorld president and chief executive officer Datuk Chang Khim Wah said in a statement that the group's strong 40% quarter-on-quarter pick-up in sales in 3QFY17 is "very encouraging".
"During the first half of the year we were very busy handing over the first phases of properties sold and to date we have delivered close to 4,500 units to our purchasers.
"We are delighted that the strong engagement with customers achieved during the handover process [has] resulted in positive word-of-mouth and increased referrals which boosted sales especially for Eco Majestic in Semenyih and Eco Spring, Eco Summer and Eco Tropics in Iskandar Malaysia," he added.
As at Aug 31, total sales achieved under the EcoWorld brand was RM3.95 billion for the 10 months of its FY17 ending Oct 31, with EWI contributing RM1.56 billion to the tally. Going forward, EcoWorld expects to remain "well-positioned" to achieve its sales target of RM4 billion for FY17.
"The achievement of the sales target will add on to the group's unbilled sales which stands at RM6.22 billion as at end-August. This will enhance the group's growth prospects going forward into FY2018 when projects undertaken by the group's joint ventures are expected to begin contributing to earnings," EcoWorld said.
Though it said earnings will grow consistently as more projects reach a higher stage of completion, it highlighted that profit for the year may be moderated due to existing funding costs it incurred, as well as the share of losses of JV companies that have not attained the criteria for profit recognition.
"Nevertheless, based on the results achieved for the nine months to July 31, 2017 and having regard to the strategic decision made to invest in the respective joint ventures, the board believes that the performance of the Group for FY2017 will be satisfactory," it said.