KUALA LUMPUR (June 11): The joint venture (JV) agreement between Eco World Development Group Bhd's BBCC Development Sdn Bhd (BBCCD) and Mitsui Fudosan (Asia) Malaysia Sdn Bhd (MFAM) to form a company which will acquire an entire residential block within Bukit Bintang City Centre (BBCC) affirmed the prospects of the development, according to MIDF Research. 

In a note today, MIDF Research analyst Jessica Low Jze Tieng said she viewed the en bloc deal positively as it would unlock the value of BBCC.

"The en bloc deal follows the partnership between MFAM and BBCCD on the Mitsui Shopping Park Lalaport retail mall project in Phase 1 of BBCC. We think that the partnership with Mitsui Fudosan Asia will help to assure the continued success of the BBCC development," she said. 

As such, she maintained a “buy” call on EcoWorld with an unchanged target price of 73 sen. 

"We expect limited near-term earnings impact from the en-bloc sale as the serviced apartment is expected to be completed by the end of 2023. Hence, we make no changes to our earnings forecast for FY20/21F. 

"Valuation of EcoWorld remains attractive, trading at 65% discount to its NTA (net tangible assets) per share of RM1.50," Low added. 

Yesterday, EcoWorld announced that MFAM and BBCCD have entered into an agreement to form a JV company known as MFBBCC Serviced Suites Sdn Bhd to acquire a serviced residence block in the BBCC development for RM242 million.

Note that BBCC is a JV project between EcoWorld, the Employees Provident Fund, and UDA Holdings Bhd. 

MFBBCC will be 51% held by MFAM and 49% by BBCCD. MFBBCC will manage and operate the property, including granting tenancies within the residences.

Part of phase two of BBCC, the 44-storey serviced residence block will house 269 units and is expected to be completed by end-2023.

At 11.46am, EcoWorld dipped 0.5 sen or 0.96% to 51.5 sen with 5.63 million shares traded. Its market capitalisation stands at RM1.52 billion.