Investment Highlights

• We maintain our HOLD recommendation on Eco World Development (EcoWorld) with a higher fair value of RM1.30 per share (from RM1.28 previously) (Exhibit 1) after imputing numbers from its new build-to-rent (BtR) project in the UK. We make no changes to our FY18-20 earnings forecasts as revenue recognition will only materialise after FY20.

• EcoWorld’s 70%-owned UK JV, EcoWorld London announced the signing of heads of terms with a substantial North American pension fund to build more than 1,000 BtR residential and commercial units on two sites in Kew and Barking, London, with a value of close to £400mil (RM2.1bil).

• The Kew site is located next to the new Brentford Football Club’s 17,250 capacity stadium that is currently under construction and just minutes away from Kew Gardens, a Unesco World Heritage Site. The Barking site is situated next to the historically important Barking Abbey, which housed William the Conqueror in 1066 whilst he constructed the Tower of London. Both sites are well connected to central London through train and underground networks and offer highly desirable yet affordable rental accommodation for tenants.

• EcoWorld London will complete the construction of the two developments to the specifications agreed with the investors and will then undertake the long-term management of the assets on their behalf.

• Planning permission has been secured for both sites and development work has already commenced with construction due to be completed in stages from 2020 onwards. Details of the contractual arrangements will be finalised by the end of October 2018.

• The project will be funded through a progressive payment structure.

Source: AmInvest Research - 30 Aug 2018