- We reaffirm our BUY recommendation on Eco World Development Bhd (Eco World) with an unchanged fair value of RM5.20/share – a 25% discount to our pre acquisition NAV of RM6.94/share.

- Post an impending corporate exercise, our ex-all fair value is RM1.77/share based on a 25% discount to our fully-diluted NAV of RM2.36/share.

- Eco World’s 13-month core net profit of RM7.2mil was within expectation.

- Eco World’s property sales of RM165mil were driven by Saujana Glenmarie (remaining GDV: RM58mil) and EcoTropics (56% take-up).

- Combined with Eco World Sdn Bhd’s (Eco World S/B) property sales of RM3bil driven by EcoSky, EcoMajestic, EcoBotanic, EcoSpring and EcoBusiness Park 1, the combined property sales stand at RM3.2bil.

- Post the acquisition of development rights from Eco World S/B, and together with the proposed EcoSanctuary and Semenyih land acquisitions, the group’s landbank would immediately be boosted to 4,926 acres with an estimated GDV of RM47bil.

- Four new projects are planned for launch in CY15, including EcoSanctuary (2Q), EcoTerraces (1Q), EcoTropics (3Q) and EcoBusiness Park 3 (1Q).

- While earnings delivery is still at early stages, the group targets to achieve RM7bil sales over the next two years –FY15: RM3bil and FY16: RM4bil – backed by eight projects. As it is, Eco World S/B exceeded its sales target of RM2bil for FY14.

- Post its FY14 results, we estimate Eco World’s earnings to expand to RM61mil in FY15F and RM137mil in FY16F. We introduce our FY17F earnings at RM268mil.

- The key risks to our forecasts are the slower-thanexpected take-up rates and delay in project launches.

- Eco World’s corporate exercise involving the proposed share split, acquisition, share subscription, rights issue with warrants and private placement, is expected to be completed by 1QCY15.

- Given a recapitalised balance sheet post the corporate exercises, Eco World must demonstrate its ability to grow land acquisitions to drive NAV growth as land acquisitions will be the primary valuation driver.

Source: AmeSecurities