DEVELOPMENT

• Eco World Development Group, SD Guthrie Berhad (SD Guthrie) and NS Corporation (NS Corp) entered a Memorandum of Understanding (MOU) to jointly develop 1,166 acres industrial park in Bukit Pelandok, Negeri Sembilan.
• The strategic collaboration was following SD Guthrie unlocking value of its landbank in Malaysia with high development value.
• The industrial park is positioned within the Malaysian Vision Valley 2.0 (MVV 2.0) economic corridor. The GDV for the industrial park is estimated at RM2.95b. The industrial park to be developed over eight years, which will feature industrial lots, ready-built factories and commercial properties tailored to high-growth sectors, including those in the aerospace, electrical and electronics, logistics, and biotechnology industries.

OUR VIEW

• Expanding industrial property development portfolio. We are neutral to positive on the MOU as the collaborations will expand Eco World Development's industrial property development portfolio. Note that Eco World Development has been eyeing to expand industrial property development division due to its expertise in developing industrial properties and high demand for industrial products in Malaysia. Note that Eco World Development has 2,415 acres of landbank earmarked for industrial parks which represented 27% of its total landbank.
• Earnings forecast maintained. We make no changes to our earnings forecast for FY25F/26F/27F pending further development on the MOU i.e. stake of Eco World Development in the industrial park and capital requirement. Meanwhile, net gearing of Eco World Development is healthy at 0.19x as of 4QFY24, making Eco World Development well-positioned to expand landbank. Overall, earnings outlook for Eco World Development is expected to be mainly supported by residential and industrial projects going forward.
• Maintain NEUTRAL with an unchanged TP of RM2.01. We maintain our TP for Eco World Development at RM2.01, based on 15% discount to RNAV. While outlook for earnings and new sales of Eco World Development are expected to remain stable, we think that the positives have been largely priced in as Eco World trading above its latest NTA of RM1.66 per share. Hence, we maintain our NEUTRAL call on Eco World Development Group.

Source: MIDF Research - 19 Dec 2024