Eco World Development (ECW) reported an RM80.4m (+21.3% YoY, +14.8 QoQ) net profit in 3QFY24, surpassing our and consensus expectation, with YTD (9MFY24) net profit of RM220.1m (+18.3% YoY) already constituting c. 79% of our and consensus full year estimates. The higher profits were mainly due to better margins recorded as gross profit margin improved from 27.2% in 3QFY23 to 31.3% in 3QFY24. The Group’s net gearing ratio as at 31 July 2024 further reduced to 0.21x, from 0.24x in 2QFY24, with cash reaching a record high of RM1.55bn. Encouragingly, its sales momentum continued with pre-sales already at RM3.5bn in 10 months, exceeding FY24 sales target. Unbilled sales remained healthy at RM4.49bn, from RM4.03bn a quarter ago. Separately, Eco World International Berhad (EWI) achieved RM501m sales exchanges plus reserves of RM48m adding up to a total of RM549m in 10 months of FY24. All told, we adjust FY24 upwards by 4.2% after imputing higher margins. Maintain Neutral with TP of RM1.50.

• Exceeding FY24 sales target, with the Group raking in RM3.5bn sales in 10 months of FY24, driven by the industrial again which performed better than expected. Iskandar Malaysia was the largest contributor, accounting for 63% of the Group’s total YTD sales, followed by 27% from the Klang Valley and 10% from Penang. We understand that its industrial segment outperformed with RM1.05bn sales achieved as at 31 August 2024, exceeding the full year record of RM1.04bn achieved in FY23. The Group’s fifth revenue pillar, QUANTUM, which in now driven by its first QUANTUM park, QUANTUM Edge in Kulai, Iskandar Malaysia, has recorded RM626m sales up to 31 August 2024. We understand it has secured a sale of 57.081 acres to Asia’s leading data centre provider, Princeton Digital Group for RM223.8m (RM90psf), on top of its first sale of 123.141 acres to Microsoft Payments (Malaysia) Sdn. Bhd. for RM402.3m (RM75psf).

• EcoWorld International (EWI) achieved RM501m sales exchanges plus reserves of RM48m adding up to a total of RM549m in 10 months of FY24. Embassy Gardens, which brought in RM224m sales, was the biggest contributor, followed by Wardian (RM146m), and Millbrook Park (RM55m). Including the net cash balances at joint ventures, the Group has a total net cash balance of RM271m as at 31 July 2024. EWI maintains its target of generating excess cash of up to RM500m by selling its completed stocks which will be distributed to shareholders in tranches over 2024 and 2025, with the first tranche amounting to RM144m to be paid in July 2024.

Source: PublicInvest Research - 20 Sept 2024