FY21 CNP of RM240m surpassed expectations as 4QFY21 achieved stronger-than-expected margins and property sales. FY21 achieved strong sales of RM3.52b which came above expectation while EWINT’s FY21 sales of RM1.38b are within our targets. FY21 dividend of 4.0 sen also surpassed our 3.0 sen target. For FY22, management guides sales of RM3.5b and RM2.0b for ECOWLD and EWINT, while our targets are slightly more conservative at RM3.3b and RM1.5b, respectively. Increase FY22E CNP by 6% and introduce FY23E CNP of RM236m. Maintain MP with an unchanged TP of RM0.85 pegged to 0.51x PBV.

Above expectations. 4QFY21 CNP of RM100.1m* led FY21 CNP to RM240m, surpassing our/consensus FY21 estimates of RM180m. This strong set of results were attributable to: (i) stronger-than expected GP margins achieved in 4QFY21 on cost savings recognised for certain completed phases due to prudent recognition earlier, and (ii) stronger-than-expected property sales achieved in 4QFY21. ECOWLD’s 4QFY21 sales of RM0.65b led FY21 sales to RM3.52b – above our/management’s RM3.2b/RM2.875b sales target.

Meanwhile, EWINT’s 4QFY21 sales of RM0.337b led FY21 sales to RM1.38b – within our RM1.5b target but missed management’s internal target of RM2.2b due to weak foreign demand on restricted travelling and increased stamp duties

*Reversed out impairment on EWINT worth RM57.3m which arose from the reassessment of nett selling prices for its properties in inner London (by Ecoworld Ballymore) as more commissions and incentives were needed to move sales.

Dividends also above expectation. Declared 2.0 sen dividend in 4QFY21, bringing FY21 dividend to 4.0 sen – above our 3.0 sen target.

Highlights. 4QFY21 CNP of RM100.1m surged 185% QoQ mainly due to higher revenue (+48%) with better GP margins of 24% (+5ppt) from cost savings recognised during 4QFY21 as explained above. Its Malaysian JV projects also provided stronger contributions (+288%) for the same reasons. YoY, FY21 CNP of RM240m marginally decreased by 1% on higher effective tax rate of 24% (+4ppt).

FY22 guidance. During its briefing, management guides FY22 new sales of RM3.5b for ECOWLD and RM2.0b for EWINT. Management alludes that the RM2.0b target for EWINT is supported by two potential BtR (Build to Rent) projects. Compared to our sales target of RM3.3b and RM1.5b for ECOWLD and EWINT, respectively, we are slightly more conservative as the HOC (Home Ownership Campaign) which provides stamp duty waiver will end by Dec 2021.

Increase FY22E earnings by 6% to RM237m after adjusting for the higher sales achieved in FY21A and better GP margin assumptions. Also introduce FY23E CNP of RM236m backed by sales projection of RM3.3b.

Maintain Market Perform on unchanged TP of RM0.85 pegged to 0.51x FY22E PBV (-0.5SD below mean). Note that the -0.5SD ascribed to ECOWLD is the highest in our coverage while the rest ranges from -2.0SD to -1.0SD.

Source: Kenanga Research - 17 Dec 2021