KUALA LUMPUR (Sept 20): Shareholders of Eco World International Bhd (EWI) are likely to receive more dividend cheques.

After its recent bumper dividend payout, the property developer intends to declare even more dividends moving forward, due to lower working capital requirement, as it looks to hold back on new launches while waiting for market conditions to improve.

In late August, EWI declared a bumper dividend of 33 sen per share, or RM792 million in total.

In its quarterly result announcement, EWI said it expects total dividends payable from its excess cash, including the RM792 million payable in September, to exceed the original estimate of RM900 million.

Its president and chief executive officer Datuk Teow Leong Seng said in a statement that the group’s management is working towards declaring a second tranche dividend of RM144 million from its excess cash in December 2023, with potentially more in FY2024.

“This is consistent with our intention to progressively distribute the bulk of the proceeds received from the monetisation of stocks, less our reduced working capital requirements, to our shareholders as dividends over time," he said.

Based on its share capital of 2.4 billion, the second tranche involving RM144 million translates into a dividend amounting to six sen per share.

As at July 31, EWI's cash balance stood at RM801.3 million compared with RM614.2 million in end-October last year.

According to Teow, as at August 31, the group and its joint venture (JV) have approximately RM1.1 billion in completed and nearly-completed stocks available for sale, with the group’s effective stocks worth approximately RM800 million.

“EWI achieved RM1.003 billion in sales plus reserves of RM157 million in 10 months of FY2023, adding up to a total of RM1.161 billion. This places the group largely on track to achieve the sales target of RM1.4 billion for FY2023.

“We will continue to focus on monetising our stocks with the aim of distributing more excess cash back to shareholders.”

“With regard to new launches, these will continue to be put on hold until market conditions improve and cost pressures stabilise. As a result, the immediate working capital requirements of the group will be lower than originally estimated.”

During the third financial quarter ended July 31 (3QFY23), EWI paid off borrowings of RM744.05 million. The property developer is currently debt free.

EWI posted a lower net loss of RM12.30 million in 3QFY2023, against RM56.68 million a year earlier, amid foreign exchange gains from repayment of shareholder’s advances from EcoWorld-Ballymore and bank balances conversion from the British pound (GBP) to ringgit.

Its lower net loss was also due to lower finance costs from the full settlement of all borrowings, lower share of losses in Eco World London, and higher interest income from unit trust and fixed deposits following the shareholder’s advance repayment from EcoWorld-Ballymore and Eco World London.

Losses per share stood at 0.51 sen, down from 2.36 sen in 3QFY2022, read its Bursa filing.

Quarterly revenue, however, fell 9.65% to RM31.17 million from RM34.50 million a year earlier, due to discounts given to accelerate sale of remaining units sold in the current quarter, in line with its monetisation strategy.

Gross profit subsequently fell 51.8% to RM3.71 million, from RM7.7 million in the same quarter last year.

Its revenue consists of proceeds from property sales from the West Village and Yarra One projects in Australia, as well as fees for marketing services by a subsidiary to the group’s JV on property sales in the UK.

For the nine-month period of FY2023, Eco World International’s net loss narrowed to RM47.68 million versus RM138.69 million a year earlier, while revenue for the period decreased 34.7% to RM76.24 million from RM116.82 million in FY2022.

The lower revenue was a result of lesser units sold in West Village and Yarra One.

“The appreciation of the GBP since 4Q2022 when we first announced our intention to distribute excess cash back to shareholders has increased the ringgit value of the group’s remaining unsold completed stocks,” said Teow.

At market close, Eco World International shares rose 4.5 sen or 13.8% to 37 sen, valuing the group at RM888 million.