Eco World Dev Group

West Village, Parramatta, Sydney (GDV: RM1.0b) was launched in 4Q15. Parramatta is the 2nd biggest city in Sydney and a major business district (about 24km west of Sydney’s CBD). ECOWLD’s West Village site is located within walking distance from a shopping mall (Westfield) and train station (200m) and is about 300m from Parramatta’s CBD (also near to the future CBD extension) and is only a 30-minute train ride to Sydney CBD. In May 2016, the NSW Premier and Minister for Western Sydney announced the AUD8b redevelopment of its CBD where 600 planning departments jobs will be moved there by 2019 and in total, 4200 public service roles will be located from Sydney CBD to Western Sydney by 2019 (1000 roles have already been moved).

The West Village project comprises a 40-storey tower with a podium and round floor retail. It features 1-, 2- and 3- bedroom luxury apartments (398 units). To date, they have secured close to 80% take-up rate for the apartments. Notably, only 10% of the work force in Parramatta actually lives in Parramatta, which is the main driver for demand of new properties in the area. Foreign investors are banking on Parramatta given the strong employment market (a lot of multinationals are located here while a lot of administrative offices are moving to Parramatta) and high population growth in the area. Note that 55% of buyers are locals while the remaining are foreigners (mainly China and South East Asia). Currently, the site has an old building on it, requiring demolition while full approval is likely to be obtained by Nov 2017. Notably, the delivery of this project has a 5-year duration with a one-year extension with a target of handover in 1H20.

Note that the project is under the soon to be listed EWI, which ECOWLD will have a 27% stake. We are positive on the progress of EWI listing given that EWI has already commenced sales and operations of its overseas property developments. EWI stands to benefit from the synergies and strengths from GUOCOL and ECOWLD. Post listing of EWI (target 1QCY17), we expect land banking to continue in both UK (London) and Australia (Sydney, Melbourne).

We maintain OUTPERFORM with an unchanged TP of RM1.58 (51% property RNAV discount with an implied FD SoP discount of 46%). The stock stands to benefit from a slew of newsflow including its partnership for growth model programs, which will help fund its development and listing of EWI. They have been the only big cap developer which has consistently met their sales targets, one of the highest in the industry

Source: Kenanga Research - 2 Dec 2016