Eco World Development Group Bhd
(Dec 11, RM3.93)
Maintain “buy” with a target price (TP) of RM6: Eco World reported 13-month results because it changed its financial year ending to October from September. Its full-year earnings came in at RM7.2 million, driven by the Kota Masai project in Iskandar Malaysia, Johor, and Saujana Glenmarie in the Klang Valley.

Looking forward to January 2015, the ongoing corporate exercise is a significant milestone for the group.

Upon completion in January, Eco World will have 4,926 acres (1,619ha) of land bank worth RM47 billion in gross development value strategically located in property hotspots in the Klang Valley, Penang and Johor.

Eco World Development Sdn Bhd (in the midst of acquiring the development rights) has booked RM3 billion in property sales year-to-date to Oct 14. Its strong branding power will continue to command market confidence; this was evident at the latest launch of Merrydale (terraced houses, over RM680,000 per unit) at EcoMajestic@Semenyih in Selangor.

Eco World also announced RM3 billion and RM4 billion sales targets for financial year 2015 (FY15) and FY16 respectively. Given the impressive year-to-date sales (RM3.2 billion) despite the soft sentiment, Eco World will be able to leverage on its unrivalled brand name to meet the targets.

A 30% stake in Eco World International is a positive catalyst.

Eco World will participate in the proposed initial public offering of Eco World International as a special purpose acquisition company to develop property projects overseas. This will be completed by the second quarter of calendar year 2015.

Eco World will invest RM562 million for a 30% stake, allowing the group to venture overseas with minimal leverage. — AllianceDBS Research, Dec 11

This article first appeared in The Edge Financial Daily, on December 12, 2014.