Eco World International's 1Q net loss widens, dragged by forex losses

KUALA LUMPUR (March 22): Weighed down by forex losses and lower revenue, Eco World International Bhd’s net loss for the first quarter ended Jan 31, 2023 (1QFY2023) doubled to RM30.82 million from RM14.66 million a year earlier.

This translated into a higher loss per share of 1.28 sen from 0.61 sen in 1QFY2022, according to the property developer’s bourse filing on Wednesday (March 22).

Quarterly revenue fell 54.58% to RM22.37 million from RM49.24 million previously, dragged by lower unit sales and handovers as the group was only selling remaining units from two projects in Australia, namely West Village and Yarra One.

Eco World International booked a RM25.97 million quarterly forex loss versus a RM2.99 million forex gain in 1QFY2022, due to the weakening of the pound against the ringgit after the repayment of advances totalling £107.86 million from its UK joint venture (JV) companies.

“As the cash repaid was still retained in British pound as at Jan 31, 2023, for reporting purposes, it was translated using the British pound versus ringgit exchange rate then prevailing which was lower than the historical exchange rate used to record the advances in Eco World International’s books,” the group said.

However, it noted that subsequent to 1QFY2023, the pound has appreciated and should it remain at the current level or continue to strengthen against the ringgit, the forex losses recognised should fully or partially reverse in later quarters.

[Crosshead] 159% q-o-q improvement in net cash position

On a more positive note, Eco World International highlighted that on a quarter-on-quarter basis, its net cash position has improved 158.67% to RM446.2 million as at Jan 31, 2023, versus RM172.5 million as at Oct 31, 2022.

The group said its net cash position is expected to strengthen further in coming quarters as the funds at its UK joint ventures are repatriated.

“Accordingly, subject to achieving the sales target and receiving the relevant regulatory approval, the board’s intention to distribute the RM900 million estimated excess cash to shareholders in the later part of 2023 is progressing as planned,” it said in a statement.

Touching on its RM1.4 billion full-year sales target, Eco World International said the group is on track with RM335 million in sales in the first four months of FY2023, plus RM189 million in reserves.

Going forward, Eco World International president and CEO Datuk Teow Leong Seng said that despite homebuyers becoming more cautious following increases in interest rates, the shortage of homes continues to provide support for housing demand.

“We plan to sustain our sales momentum by offering attractive incentive packages to buyers and tapping overseas demand through international marketing events,” he said, adding that this will enable significant additional cashflow to be generated for the group in the upcoming quarters.

Overall, Teow said Eco World International’s focus in FY2023 will continue to be the monetisation of stocks, cash preservation and generation in order to deliver the promised distribution of excess cash to shareholders.

Meanwhile, the group also announced that its acting chairman Cheah Tek Kuang has been redesignated to the chairman post from his position as a director, effective Wednesday.

Shares in Eco World International closed down half a sen or 1.18% at 42 sen, giving the group a market capitalisation of RM1.01 billion.