First launch for 2016 well received

The successful launch of 750 units of Karisma apartments at Eco Majestic with a 85% booking rate marks a good start. ECW remains confident of its ambitious sales target of MYR4b for FY10/16. Surprises could come from potential enbloc sales at its BBCC project. We maintain our earnings forecasts and MYR1.67 RNAV-TP (on an unchanged 40% discount to RNAV) pending the release of its 1QFY10/16 results on 24 Mar. Reiterate BUY.

First affordable apartments at Semenyih

We recently visited the official launch (buyers’ unit selection session) of ECW’s first high-rise affordable apartment project - Karisma - at Eco Majestic (EM), Semenyih. The Karisma comprises 750 units of freehold apartments (800 sq.ft.; ≈MYR325psf ASP) which are now 85% booked since the soft-launch in mid-Feb 2016. The Karisma apartments form the 7th phase of the EM project which has a total GDV of MYR11b. Phase 1-6, which offered 2,100+ units of landed properties, was launched in May 2014-2015, with an average take-up rate of 85% todate.

Bucks the trend with the right product

We were impressed with the strong turnout at the Karisma launch and its strong booking rate despite the softening property market. We attribute the success to its right pricing and right product supported by attractive marketing activities. ECW just ended its month-long ‘Flowers Show’ at EM last Sunday. We understand that the ‘Flower Show’ attracted more than 150,000 visitors (a client base for ECW to tap into in the future).

Potential surprises from BBCC?

Management remains confident of its MYR4b sales target for FY10/16 (vs. MYR3b locked-in in FY15), supported by existing and new projects - Bukit Bintang City Centre (BBCC) - as well as international projects (via an associate company). Surprises could come from potential enbloc sales at BBCC, as management is close to signing the heads of agreement on the project. Our sales assumption for FY16 is MYR2.8b, which excludes its overseas projects (via an associate co).

Source: Maybank Research - 11 Mar 2016