KUALA LUMPUR, (Feb 5): Eco World Development Bhd rose as much as 4% before paring gains on news it sealed a joint-development agreement with UDA Holdings Bhd and the Employees Provident Fund (EPF) to develop the abandoned Pudu Jail site here.

The tract between Jalan Pudu and Jalan Hang Tuah will see the development of commercial and residential properties.

Eco World (fundamental: 0.95; valuation: 0.3) rose as much as nine sen or 4% to RM2.38. At 12:30pm, the stock settled at RM2.32 with some one million units changing hands.

Yesterday, Eco World said it signed an agreement to jointly invest in the regeneration of the former Pudu Jail site with UDA Holdings and the EPF to create the Bukit Bintang City Centre (BBCC). UDA and Eco World will hold a 40% stake each in joint venture entity BBCC Development Sdn Bhd while the EPF will own 20%.

Land owner UDA Holdings will grant BBCC Development the right to develop the tract for RM1.03 billion.

In a note to clients today, AmResearch Sdn Bhd analyst Tan Ee Zhio said key positives for the development were its sizeable prime land in the heart of the city, and EPF's strong financials and the fund's status as a long-term partner that matches the development life cycle.

However, Tan noted that the greatest challenge was whether buyers would be keen to buy a property on a former prison site given the perceived stigma.

"The consortium needs to create excitement through the successful development of the lifestyle mall (NLA: 1.2 mil sf) and offices. Such a move will have a spillover impact on demand for subsequent launches of residential properties," noted Tan.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)