KUALA LUMPUR, Feb 18 (Bernama) -- Eco World Development Group Bhd’s shares on Bursa Malaysia rose in early trade after disposing of its 56.06 hectares of freehold land in Iskandar Malaysia, Johor, to Microsoft Payments (Malaysia) Sdn Bhd for RM693.96 million.
At 10.03 am, the counter increased one sen to RM1.85 with 1.58 million shares transacted.
In a filing with Bursa Malaysia on Monday, the property player said the land consists of 117 parcels of freehold vacant land and road reserves in Eco Business Park I.
Following the disposal, most analysts were positive about Eco World’s earnings outlook, with two issuing “buy” recommendations and one maintaining a “neutral” rating on the stock.
MIDF Amanah Investment Bank Bhd said it was slightly positive about the Eco World land disposal as it unlocked the value of the landbank.
It said consideration from the land disposal would be utilised to complete the remaining infrastructure development on the land and working capital.
“The land disposal is expected to lower the net gearing of Eco World to below 0.1 times from 0.19 times in the financial year (FY) 2024.
“The strong balance sheet will help Eco World to expand its landbank and for its upcoming industrial development in Negeri Sembilan,” it said in a note today.
MIDF said it made no changes to its earnings forecast and upgraded Eco World from “neutral” to “buy”, with an unchanged target price (TP) at RM2.01, as the recent price weakness provided an opportunity for investors to accumulate.
“Prospect for its business park and Quantum segment remains solid with an influx of data centre development,” it added.
Meanwhile, Maybank Investment Bank Bhd said the land sale would accelerate the asset monetisation process, strengthen Eco World’s balance sheet, and demonstrate management’s capability in securing deals.
“(This is) especially important amid the United States restrictions on artificial intelligence chip exports, which may slow down data centre demand in Malaysia.
“We adjust our earnings forecasts by -1 per cent to +31 per cent over the FY2025-2027. Our TP remains intact at RM2.34 (+1 sen), (and we) maintain ‘buy’ (on the counter),” it said in a separate note.
Similarly, in a separate note, Public Investment Bank Bhd expected Eco World to beat its sales target, as the latest substantial land disposal already accounted for 28 per cent of the group’s FY2025 sales target of RM2.5 billion.
It said that assuming a profit before-tax margin of circa 30 per cent, the investment bank estimates gains from the land sale to be at least RM150 million.
“Pending completion of the deal, we keep our estimates unchanged for now, maintaining a ‘neutral’ call (on Eco World) with TP unchanged at RM1.90 or about 10 per cent premium to book value, given its consistency of delivering profits and decent dividend yield,” it added.
-- BERNAMA
