Eco World near-term outlook promising
THE Eco World brand may only be four years old, but its track record has been nothing short of impressive.
Eco World Development Group Bhd (Eco World), which handles the brand’s domestic projects, has achieved total sales worth RM12bil. For its current financial year ending Oct 31, 2017 (FY17), the company is on track to hit its sales target of RM4bil – a stellar amount in spite of the current property market slowdown.
Eco World chairman Tan Sri Liew Kee Sin assures that the worst is over for the company, and is confident about the property developer’s near-term outlook.
“Our sales are there, but not our profits. Our earnings will only come in from 2018 onwards, but the big one is in 2019. This is when our overseas projects start giving us income. Last year and this year have been the toughest years for us.
“As a developer, we need to build, collect the money and let the tree grow, so to speak... and once we become a solid big tree would we call ourselves a successful company. We’re not there yet.”
Eco World’s 27%-owned associate firm and international arm Eco World International Bhd (EWI), which was listed in April, had achieved total contracted sales of £1.2bil (RM6.65bil) as of Jan 31, 2017.
Liew says the next step is to “stabilise the group”. “We have the fundamentals in place already – our systems of service, product quality, our DNA. Now, we need to construct it, bring this RM18bil (combined local and international sales) back to us and undertake more projects to keep moving upwards.”
He adds that Eco World will be launching four projects this month.
“At the end of this month, we’re doing our Eco World Global launch. It’s our version of Black Friday. Last year, we did it at the end of September as well. We launched four or five projects and achieved RM1bil sales.
“We’re doing it again this month. We’re launching four new projects and have the build up already. The pre-registrations are all there.”
Commenting on the local property segment, Liew believes that the market is returning.
“The market is there. It’s about providing the right products. If you sit and wait for the market to come back, it will never happen. You must always seek the market.”
He says that Eco World has no plans to jump on the “affordable housing” bandwagon like most developers.
“In the last four years since we started, most developers would have said that they were going into affordable homes. But it’s something that we’ve never embarked on because developers are competing in a segment where there is low profit margins.
“It’s also a segment where the loan rejection rates are high and the buying power is lower. We make the effort to go above the market; we call it the aspirational market.”
Liew says the local property market has been hit by two things – a segment downgrade and a country downgrade.
“If not for this, the share prices of property stocks would surely be moving. Look at all the other property stocks. None are flying, maybe with the exception of the speculative stocks.
“But despite this and our kind of gearing, our share price should have tanked, but it hasn’t. And we have borrowings.
“Our gearing is 0.6% – higher than anyone else. But our share price has not tanked because of the way we look at the market. Of course, we take risks, but they are calculated risks – despite the gearing.”
Year-to-date, Eco World’s share price has risen over 15%. The EcoWorld brand achieved total property sales worth RM3.95bil in the first 10 months of FY17 via its offerings in the Malaysian and international markets.
On the domestic front, the company, which has presence in the Klang Valley, Iskandar Malaysia and Penang, contributed sales of RM2.39bil while EWI, with a core business involving property development outside Malaysia, chalked up sales of RM1.56bil.
Eco World’s six projects in the Klang Valley accounted for RM1.80bil, its seven projects in Iskandar Malaysia RM525mil, and the two projects in Penang contributed RM65mil.
Meanwhile, EWI’s three projects in London recorded sales of RM1.31bil, while its two projects in Australia contributed RM249mil.