- We reaffirm BUY on Eco World Development with an unchanged fair value of RM6.24/share – a 10% discount to our pre-acquisition NAV of RM6.94/share. Post an impending corporate exercise, our ex-all fair value is RM2.45/share, based on a 10% discount to our fully-diluted NAV of RM2.72/share.

- Eco World yesterday reported 3QFY14 earnings of RM1.7mil, bringing the 9MFY14 total to RM5mil. We deem the results to be in line with our estimates, comprising 77% of our full-year projection, but below the consensus estimates of 54%, given the absence of any sizeable launches.

- Eco World achieved 9MFY14 property sales of RM121mil, contributed by two projects, namely EcoTropics and Saujana Glenmarie. Unbilled sales stood at RM140mil.

- Combined with the cumulative property sales launched by Eco World Sdn Bhd (Eco World S/B), the property sales amount to RM2.1bil. These projects include EcoSky, EcoMajestic, EcoBotanic, EcoSpring and Eco Business Park1.

- Take-up rates for Eco World S/B launches are encouraging. Tower A and Tower B for EcoSky have been fully sold, while Tower C (launched in March) has achieved a 50% take-up. Encouraging take-up rates have also been seen for Eco Majestic, Eco Spring and Eco Business Park 1which were launched simultaneously in May – of 95%, 85% (of non-bumi units) and >80%, respectively. All the non-bumi units, the semi-D and cluster homes for Eco Botanic have been fully taken-up.

- The group’s corporate exercise involving the acquisition of development rights for several landbanks and property development projects of Eco World S/B, coupled with a fund-raising exercise are on-track to be completed by October 2014.

- All said, we maintain our EPS forecast and BUY recommendation. More importantly, we believe that the key valuation driver for Eco World is land acquisitions. Eco World must continue to demonstrate its ability to grow land acquisitions to drive NAV growth, given its huge share capital expansion following a recapitalised balance sheet post the corporate exercise.

Source: AmeSecurities