- We reaffirm our BUY rating on Eco World Development Group Bhd (Eco World) with an unchanged fair value of RM5.82/share – a 10% discount to our estimated pre-acquisition NAV of RM6.46/share. Post acquisition and the equity fund-raising exercise, our ex-all fair value is RM2.39/share, based on a similar 10% discount to our fully-diluted NAV of RM2.65/share.

- Local dailies reported that UDA Holdings Bhd had formed a consortium with EPF and Eco World to jointly redevelop the former Pudu jail site (GDV: RM7bil), measuring 19 acres.

- UDA and Eco World will hold a 40% equity stake respectively in a special purpose vehicle, while EPF would hold the remaining 20%. UDA remains as the land owner.

- Eco World is said to be chosen as part of the consortium due to the expertise of its key personnel who were involved in the Battersea Power Station Project in London. Eco World is currently spearheaded by a strong management team transplanted from SP Setia.

- This site is dubbed as the Bukit Bintang City Centre. It is earmarked as a mixed development project, comprising seven commercial and residential blocks, office towers, a hotel and a retail mall. Construction works is expected to begin early next year.

- This land has been abandoned for the past few years despite being made an ETP project. In 2011, Everbright International Construction (a China-based developer) was suppose to develop the project with a RM2bil investment with UDA.

- We understand that the shareholders’ agreement is still being fine-tuned. We maintain our earnings forecast and NAV model for now, pending further clarification from management.

- The main concern about this piece of land is obtaining tenants as the site was Kuala Lumpur’s main prison (101-year old Pudu Jail) that was closed in 1996. There is also the challenge of new office and retail space coming into the market in Kuala Lumpur city centre with new projects – i.e. Tun Razak Exchange, Warisan Merdeka, Pavilion Mall Extension and Vision City – being built. 

Source: AmeSecurities