PETALING JAYA: EcoWorld Development Group Bhd’s (EcoWorld Malaysia) prospects remain promising as it focuses on township and industrial developments in the Klang Valley and Johor.
The property developer’s plan to expand its affordable-housing offerings under its “Duduk” series of projects is also expected to support the group’s growth.
Citing a recent engagement with the company, Kenanga Research said for the residential segment, EcoWorld Malaysia would continue to focus on the Klang Valley, which accounted for 48% of its total gross development value (GDV) of RM25.7bil.
“The group’s township projects in the Klang Valley will remain well-received, primarily driven by their good locations and being self-contained and self-sufficient, with shops, malls, schools and recreational areas within the developments,” Kenanga Research said.
The research house said EcoWorld Malaysia is counting on its RM3.9bil Eco Botanic township development in Johor, to position itself for the spillover effects from various infrastructure projects in the state such as the Johor Baru-Singapore rapid transport system and policy initiatives such as the special economic zone in Forest City.
It added that EcoWorld Malaysia is looking to expand Eco Botanic by acquiring surrounding land.
“In terms of take-up for its products, we gathered that it stands at a solid 80% in the Klang Valley and 90% in Iskandar, Johor,” Kenanga Research said.
“While taking comfort from these strong sales numbers, we are mindful that developers typically stagger their launches in small batches these days, which naturally results in high take-up rates,” it added.
Kenanga Research noted that EcoWorld Malaysia is also well positioned to benefit from the affordable-housing segment driven by urban migration and growth in the number of families in the country.
“It has plans to expand its affordable-housing offerings under the Duduk series costing less than RM650,000, which currently only constitutes 1% of the total group GDV (at RM500mil). The added appeal of the Duduk series is their locations that are within established townships with existing infrastructure, amenities and community,” the research house said of EcoWorld Malaysia’s affordable-housing projects.
On the company’s industrial products, Kenanga Research said sales would be underpinned by an outstanding GDV of RM4bil, accounting for 6% of total GDV.
EcoWorld Malaysia’s industrial GDV is driven primarily by Eco Business Park 5 in Puncak Alam, Selangor, and Eco Business Park 1, 2, and 3 in Johor.
“The key drivers for the group’s industrial offerings are their prime locations close to highways; the ability to offer customisation for things such as size and accessibility to utilities and amenities; and the accelerated industrialisation in Johor due to infrastructure projects and policy initiatives,” Kenanga Research said.
The brokerage has kept its “underperform” rating on EcoWorld Malaysia, calling the counter’s valuations rich.
However, it raised the target price for EcoWorld to RM1.27 from RM1.20 previously, having brought forward profit recognition for some of its projects.