Eco World Development (ECW) ended FY24 with a quarterly net profit of RM83.4m (>100% YoY, +3.7% QoQ). Again, the results were dragged by impairments on investments amounting to RM38m in the absence of which, Group core net profit would have come in at about RM341.5m, surpassing our and consensus FY24 net profit estimates by about 12%. Total pre-sales clinched breached the RM4bn (RM4.07bn, specifically) mark which is a record high for the Group. Unbilled sales were down slightly to RM3.96bn (from RM4.49bn a quarter ago) but we believe the Group should not have problems maintaining it at the RM4bn levels with more launches impending. Separately, Eco World International Berhad (EWI) achieved RM531m sales exchanges plus reserves of RM50m adding up to a total of RM581m in FY24. All told, we adjust FY25-26 estimates upwards by 8%/13% after imputing higher margins as most of its projects are from mature townships that generally yield better margins. Maintain Neutral though we nudge TP higher to RM1.90 (from RM1.50 previously) or about 10% premium to book value, given its consistency of delivering profits and decent dividend yield.

• Highest pre-sales ever at RM4.07bn. Group sales in FY24 were mainly contributed by its projects in Iskandar Malaysia (57% of total sales or RM2.3bn) and in the Klang Valley (31% of total sales or RM1.27bn). Meanwhile, the remaining 12% of the total pre-sales were from projects in Penang which netted about RM470m. We understand that sales under the Eco Rise pillar recorded the highest growth in FY24 with RM1.08bn secured, more than double the RM509m in FY23. On the commercial front, its Eco Hubs pillar contributed RM656m (+27% YoY) in sales for FY24 while its industrial pillars, namely Eco Business Parks and QUANTUM, achieved total sales of RM1.11bn (+6% YoY), bolstered by strong data centre demand with two parcels of industrial land at its first QUANTUM Edge park being sold to Microsoft Payments (Malaysia) Sdn Bhd and Princeton Digital Group for a combined sales value of RM626m.
• Setting FY25 sales target of RM2.5bn, which admittedly appears to be conservative. We understand that is mainly due to the uncertainty of its new land deals completion. To recap, recent land acquisitions announced among others include 240.314 acres adjacent to Eco Botanic and Eco Botanic 2, 8.9 acres situated next to Eco Sanctuary and 847.249 acres land in the Semenyih corridor located right beside Eco Forest for the planned development of Eco Forest 2. Elsewhere, EWI achieved RM531m sales exchanges plus reserves of RM50m adding up to a total of RM581m in FY24. EWI is declaring a final dividend of 5 sen for FY24, which translates to RM120m and combined with the RM144m interim dividend already distributed, total dividends for FY24 amount to RM264m.

Source: PublicInvest Research - 13 Dec 2024