• Eco World Development Group Bhd (“ECW”) is principally involved in the Property Development with a land bank size of 8,318 acres located primarily in the Klang Valley, Iskandar Malaysia and  Penang.

• Despite protracted macroeconomic and sectoral challenges, the  company managed to attain record breaking sales of RM3.84bn in  FY2022 which reflects tremendous demand for its products.

• ECW has been rewarding its shareholders with dividend payout  that ranged from 44% and 64% of PAT over FY20-22. In FY22, the  group paid 5 sen DPS which translates into an impressive yield of  7%.

• The stock is currently trading at Price-to-Book ratio of 0.5x, which  is in line 5-year historical average. It is indicatively fully valued at  this juncture.

Company Background

ECW is a Malaysian property development company with a land bank  of approximately 8,318.3 acres and a gross development value (GDV)  of RM85bn. It operates in the Klang Valley, Iskandar Malaysia, and  Penang, encompassing 20 projects that include affordable, upgrader  and luxury homes, integrated high-rise developments, and green  business parks. The brand has expanded its presence into the United  Kingdom and Australia through Eco World International Berhad.

Industrial Segment in the Spotlight

ECW sold 92 acres of industrial lands at Eco Business Parks II in Iskandar  Malaysia to the Haitian Group, a major industrial equipment  manufacturer from China. This sale is expected to attract other  industrialist to the area, which could elevate its development and  consequently, value creation. The presence of foreign direct  investments, like the Haitian Group, can also benefit the local  community by creating more job opportunities and increase business  opportunities.

Heightened Interest in Residential properties

In the first four months of FY2023, ECW's core residential business  achieved total sales of RM548mn, with sustained interest in the  upgrader products. The demand for various types of homes in multiple  locations, including Eco Majestic, Eco Forest, Eco Sanctuary, Eco  Ardence, Eco Grandeur, Eco Botanic 1 & 2, Eco Spring, Eco Tropics in  Iskandar Malaysia and Eco Horizon in Penang, remained strong. Its solid sales were also boosted by the launch of SWNK Houze serviced  apartments at Bukit Bintang City Centre and the ongoing sale of Eden  Condominium units at Eco Sanctuary.

Source: BIMB Securities Research - 12 May 2023