Eco World near-term out­look promis­ing

The Star Malaysia - StarBiz - - Cover Feature -

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.

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