EcoWorld Malaysia well positioned for growth
PETALING JAYA: Eco World Development Group Bhd (EcoWorld Malaysia) has a solid war chest to grow its property investments and for land acquisitions, analysts say.
RHB Research said the property developer's disposal of 410 acres of industrial land has provided proceeds of RM1.71bil.
In addition to RM5.22bil in unbilled sales and RM600mil in sukuk funding, the cash inflows come in handy to fund working capital to kick-start new projects, finance investments in data centre facilities and acquire new land.
The research house said such initiatives would propel EcoWorld Malaysia into a high-growth phase.
'We expect net gearing to hover around the current level of 0.55 times over the next one to two years, as EcoWorld Malaysia is in an expansionary mode.'
The research house also noted that recurring income from data centres will bump up EcoWorld Malaysia's earnings for its financial year ending Oct 31, 2028 (FY28).
'FY28 earnings should see a quantum leap on maiden contributions from EcoWorld Malaysia's build-to-lease data centre for Pearl Computing Malaysia.
'We estimate initial contributions from the lease income at around RM100mil-RM110mil a year, representing over 20% of our FY27 earnings estimates.
'Key risks are an unexpected slowdown in economic growth and unfavourable turn in regulations for data centres,' the research house said.
EcoWorld Malaysia is also seen as the best proxy to Malaysia's the current property sector upcycle.
The developer's land is strategically located in key high-growth areas, such as the Klang Valley and Iskandar Malaysia in Johor, which are benefitting from upcoming infrastructure projects and influx of foreign direct investments in Johor and Selangor.
The company has total land holdings of 4,611 acres, of which 3,515 acres, 943 acres and 153 acres are located in the central, southern, and northern regions, respectively.
'The rapid monetisation of 410 acres of industrial land over the past year, on top of usual land utilisation, indicates highly efficient land turnaround time and solid management execution track record.'
Going forward, RHB Research said three key projects are set to drive EcoWorld Malaysia's property sales from FY26.
It has been a few years since EcoWorld Malaysia kick-started any sizeable greenfield development.
In the pipeline are Eco Radiance in Semenyih, Selangor; Eco Botanic 3 in Iskandar Malaysia Johor; and Eco Business Park VII in Negri Sembilan.
'Cash flow should be manageable too, given the rest of its projects are entering their life cycles of eight to 10 years. Hence, cash flow from these mature projects should be consistent,' the research house said.
RHB Research initiated coverage on EcoWorld Malaysia with a 'buy' call and a target price of RM3 per share.
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