Eco World’s 9MFY17 misses expectations

KUCHING: Eco World Development Group Bhd’s (Eco World) earnings for the first nine months of the financial year 2017 (9MFY17) came below expectations, as financing costs and initial losses from joint venture (JV) companies affected the company’s performance.

In a report, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) noted that Eco World’s 9MFY17 core net income (CNI) of RM81.4 million is below consensus’ full year forecast.

It pointed out that earnings were affected by higher than expected finance costs and share of the initial losses incurred by JV companies.

“The higher finance costs are due to new term loans taken to fund the investments in and advances to JV and associated companies.

“Earnings was also affected by share of the initial losses incurred by JV companies (namely EWI, Eco Grandeur, Eco Ardence and BBCC) pending commencement of property development profit recognition,” it explained.

Aside from that, MIDF Research noted that Eco World’s RM2.39 billion secured sales represents 60 per cent of management and its full year target of RM4 billion.

“We are maintaining our full year sales target as Eco World plans to launch three major projects by end September. These include Eco Forest at Semenyih, Selangor, Eco Business Park V at Ijok, Selangor and Eco Horizon at Batu Kawan, Penang,” it added.

Meanwhile, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said Eco World’s earnings were in line with its expectations.

“We believe market consensus may not have fully built-in higher finance costs arising from funding equity stakes in their JCE/associate projects, which cannot be capitalised,” it opined.