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Maybank IB Research raises Eco World Devt target price

KUALA LUMPUR: Maybank Investment Bank Research has raised its target price for Eco World Development (ECW) from 78 sen to 93 sen after its strong locked-in property sales and an expected recovery in sales after the lockdown is lifted.

It said on Monday ECW’s 3QFY10/21 net profit of RM35mil (-65% YoY, -17% QoQ) was below its expectation but in line with consensus.

Sales wise, ECW’s 10MFY21 locked-in property sales of RM3.1bil were 9% above its FY21 sales goal.

Elsewhere, its net gearing continued to improve to 0.51x in end-3Q21 (from 0.55 times in end 2Q21).

“We adjust our earnings forecasts by -9% to +24% to factor in NRP 1 and a higher sales assumption of RM3.5bil for FY21. Our TP is raised to 93 sen (+15sen) on 0.55x FY22 price-to-book value (PBV),” it said.

Maybank Research said ECW reported a 3QFY21 net profit of MYR35.1m (-65% YoY, -17% QoQ), lifting 9MFY21 net profit to RM139.9mil (-9%), accounting for 65%/70% of Maybank Research/consensus full-year estimates.

The weaker-than-expected earnings performance was mainly dragged by the imposition of stricter SOPs at project sites that have led to slower progress billings in 3QFY21, partly cushioned by higher sales of completed/near completed products.

“Net gearing continued to improve to 0.51 times in 3QFY21 (from 0.55 times in 2QFY21),” it said.

Elaborating on the sales target, the research house said ECW has locked-in an impressive RM3.1bil in property sales in 10MFY21, exceeding its own FY21 sales target of RM2.9b (Maybank Research: RM3.1b) by 9%.

The impressive sales performance was driven by its new products that target the M40 group and first time homebuyers as well as pent-up demand amid a low interest rate environment.

“Management has not provided new sales target for FY21 so far. As at August 2021, unbilled sales (Malaysia projects) were RM3.7bil or 1.2 times our FY22E revenue,” it said.

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