Eco World’s FY19 to be supported by higher contribution from joint ventures, EWI

KUCHING: Eco World Development Group Bhd’s ( Eco World) earnings outlook for the financial year 2019 ( FY19) is expected to be supported by higher contribution from joint ventures and Eco World International Bhd ( EWI).

According to the research team at MIDF Amanah Investment Bank Bhd (MIDF Research), Eco World ended FY18 on a positive note, with core net income of RM167.2 million coming within expectations.

“On sequential basis, 4QFY18 core net income was higher at RM68.5m (up 78.8 per cent q- oq), mainly due to higher sales achieved in 4QFY18 following the success of Eco World’s # OnlyEcoWorld Campaign. The higher sequential earnings were also driven by higher contribution from joint ventures (up 104 per cent q- o- q).

“That brought cumulative earnings in FY18 to RM167.2m (up 47.8 per cent y- o-y). The higher earnings in FY18 were mainly contributed by lower selling and marketing expenses (down 55.8 per cent y- o-y), lower administrative expenses (down 17.6 per cent y- o-y) and higher contribution from joint ventures (Eco Grandeur, Eco Horizon, Eco Ardence and Bukit Bintang City Centre),” it explained, noting that unbilled sales of RM4.6 billion provide two years of earnings visibility.

It further highlighted that Eco World recorded new property sales of RM1.11 billion in 4QFY18, higher than new property sales of RM1.08 billion in 3QFY18.

“The strong sales in 4QFY18 were driven by # OnlyEco World Campaign and EcoWorld Help2Own financing package. That brought total new sales to RM3.1 billion in FY18 which is slightly below management new sales target of RM3.5 billion.

“Looking ahead, Eco World targets to achieve total new sales of RM6 billion over the next two years,” MIDF Research added.

All in, the research team maintained a ‘ buy’ call on the stock.