Friday 29 Mar 2024
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KUALA LUMPUR (June 26): CGS-CIMB Research has maintained its “hold” rating on Eco World International Bhd (EWI) with an unchanged target price (TP) of 50 sen after the developer’s core net profit for the first half of the financial year ended April 30, 2020 (1HFY20) came in below the house and Bloomberg consensus at 8% of full-year forecast. 

In a note today, the research house said the net profit was below expectations due to slower-than-expected revenue recognition from its projects. 

“There was no mandatory lockdown imposed in the UK and Australia, but construction progress was slower due to strict Covid-19 safety and preventive protocols,” the research house noted. 

However, works have fully resumed following a two- to three-month slowdown in site progress, according to the information gathered by the research house. 

“West Village has achieved practical completion in May 2020 (slight delay from initial target in April 2020), while handover of Wardian and Yarra One should commence by 4QFY20 (continuing through to 1QFY21). We gather that EWI handed over circa 200 units in West Village in June 2020,” it added. 

Given the expected delay in project handover and development timeline, CGS-CIMB Research has cut its earnings per share (EPS) by 9% to 46% for FY20 and FY22.

Meanwhile, the research house has raised its EPS forecast by 28% for FY21. 

As such, it now anticipates the company to record an EPS of 6.1 sen for FY20, 7.5 sen for FY21 and one sen for FY22. 

Yesterday, EWI reported a net profit of RM20.06 million in 2QFY20 compared to a net loss of RM11.98 million previously. Revenue stood at RM113,000 versus a revenue of nil last year.

This is mainly due to completion and handover of higher number of units sold to customers, as well as revenue and profit recognition of EcoWorld London’s built-to-rent sales, it said.

For 1HFY20, net profit grew to RM25.25 million from RM10.78 million a year ago after reporting a revenue of RM164,000. 

Nonetheless, CGS-CIMB Research is optimistic that the property developer can achieve its new sales target of RM2.2 billion for FY20, given the steady sales from open market and anticipated closing of the built-to-rent deal.

It also gathered that all sales galleries in the UK and Australia have reopened after the temporary closure in March and April this year due to the pandemic outbreak. 

As of June 15, EWI’s new property sales stood at RM808 million.

Out of the amount, RM787 million were from its London projects (mainly by EcoWorld-Ballymore) and the remaining RM21 million from Australia. 

At 4.18pm, shares of EWI were traded 1.5 sen or 3.45% higher at 45 sen after some 11.62 million shares exchanged hands. Market capitalisation stood at RM1.08 billion

Year to date, the group has fallen 52% from 92 sen in December last year.

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