KUALA LUMPUR (Dec 17): Eco World Development Group Bhd (EcoWorld) and its 27%-owned associate Eco World International Bhd (EWI) have set a combined sales target of RM5 billion for the financial year ending Oct 31, 2021 (FY21).
"Based on the strategic plans we have put in place in every geographic location to restrategise and refocus on key segments of the market that have proven depth and resilience, I am confident that the target, despite being 30% higher than the sales achieved in FY20, is attainable," said EcoWorld chairman Tan Sri Liew Kee Sin.
“In addition, the proactive steps taken in FY20 to reduce and reset the cost structure of both our Malaysian and international operations, coupled with our team’s willingness to continually reinvent and relearn the way we do business, will help counteract the impact of a soft property market and preserve our cash flow and profit.
“Based on the measures undertaken, I am therefore confident the EcoWorld brand is well positioned to not just come out of this crisis but to thrive in the years ahead,” he said in a statement today.
Liew noted that EcoWorld exceeded its FY20 sales target of RM2 billion by 15% with full-year sales amounting to RM2.3 billion.
Sales in the fourth quarter ended Oct 31, 2020 (4QFY20) exceeded RM1 billion, higher than the RM960 million recorded in 3QFY20.
Collectively, sales in the second half of FY20 (2HFY20) accounted for 85% of total sales in FY20.
As for EWI, Liew said the group recorded its strongest quarterly sales totalling RM448 million in 4QFY20, bringing its full-year sales to RM1.4 billion.
“This was 25% higher than in FY19 despite the challenging market conditions and disruption to marketing plans for many locations due to Covid-19. The substantially stronger sales clearly reaffirmed London’s position as a major property investment destination for global property investors,” he said.
EcoWorld said its net profit fell 18.41% to RM66.45 million for 4QFY20 from RM81.46 million a year ago. Revenue declined 30% to RM635.47 million from RM906.54 million.
On a quarter-on-quarter (q-o-q) basis, its net profit was significantly higher than the RM13.81 million recorded for 3QFY20, while revenue was up 33% from RM477.87 million.
EcoWorld declared a maiden interim dividend of two sen per share.
For the full financial year, the groyup’s net profit shrank by a third to RM135.17 million from RM203.42 million for FY19, while revenue dropped 18.91% to RM2 billion from RM2.46 billion.
The group attributed the lower profit for FY20 mainly to closures of sales galleries during the movement control order (MCO) period, the temporary cessation of site activities from mid-March to mid-June, and the cumulative impact of inventories written down in 3QFY20 and 4QFY20.
To mitigate the impact of the lower gross profit, the group said extensive cost control measures were implemented group-wide. This resulted in total savings of RM84.5 million in selling, marketing and administration expenses in FY20.
"As a result, the group was able to record a profit before tax (PBT) of RM169 million and profit after tax (PAT) of RM135.2 million for FY20. If not for the write-down of inventories of RM98.8 million, the PBT would have been RM268 million, slightly higher than the FY19 PBT of RM266 million," it noted.
EcoWorld president and chief executive officer (CEO) Datuk Chang Khim Wah said the group’s business park segment recorded sales jumping 193% to RM220.4 million in 4QFY20 from RM75.2 million in 3QFY20.
“A little known fact about EcoWorld is the size of our industrial portfolio. We are quite a big player in this space with approximately 1,760 acres under development. This gives us a total gross development value of RM9.5 billion from our four Eco Business Parks located in Senai, Tebrau and Pasir Gudang in Iskandar Malaysia, and Puncak Alam in Selangor,” he said.
“Over the years, we have built up a strong network of contacts with local and foreign industrialists, and developed a close working relationship with both federal and state regulatory authorities involved in the promotion and approval of industrial developments in Iskandar Malaysia and Selangor.
"In FY21, we intend to further grow our share of this important market,” he added.
Meanwhile, EWI saw its net profit plunge 85.25% to RM17.44 million for 4QFY20 from a year ago, even though revenue jumped to RM57.38 million from RM254,000.
For FY20 as a whole, its net profit more than halved to RM80.33 million from RM187 million a year ago. However, its revenue improved significantly to RM672.99 million from RM478,000.
The weaker performance in FY20, it said, was due to a lower share of results of joint ventures (JVs) and the commencement of accounting impairment of goodwill.
"The lower share of results of JVs was partly due to Covid-19 site closures and social distancing measures implemented, which resulted in slower progressive build-to-rent revenue recognition, and a lower number of units being completed and handed over in FY20," it explained.
EcoWorld shares closed up half a sen or 1% at 50.5 sen, valuing the group at RM1.49 billion, while EWI fell five sen or 9.71% to 46.5 sen, with a market capitalisation of RM1.12 billion.