INVESTMENT HIGHLIGHTS

• FY16 earnings within expectation

• Revenue grew by 49%yoy to RM2.55b

• Achieved its sales target of RM4.0b

• FY17 Gross Sales target of RM4.0b

• Maintain BUY with Target Price of RM1.68

FY16 earnings within expectation. Eco World Development Group (ECOWLD) FY16 Core Net Income (CNI) of RM129m was within expectation as it achieved 104% and 102% of ours and consensus forecast respectively. No dividend is declared and this is within expectation as the Company is still in high growth stage.

Revenue grew by 49%yoy to RM2.55b. The strong revenue growth is due to ongoing recognition of projects in the Klang Valley (Eco Majestic, Eco Sanctuary and Eco Sky), Iskandar Malaysia (Eco Botanic, Eco Spring, Eco Summer, Eco Business Park 1, Eco Tropics and Eco Business Park III) and Penang (Eco Meadow and Eco Terraces).

Achieved its sales target of RM4.0b. ECOWLD secured sales of RM4.01b for FY16 which is close to its target of RM4.0b. We gather that RM3.40b of the sales was from local projects. The remaining RM0.61b was generated from its Pro-Forma 27% share of FY2016 sales from EcoWorld International (EWI).

FY17 Gross Sales target of RM4.0b. For FY17, ECOWLD aims to secure RM4.0b Gross Sales from all Malaysian development projects managed by EcoWorld (including JVs). Note that in FY17, ECOWLD will be entitled to a proportionate share of international sales achieved by EWI based on the Group’s proposed 27% shareholding in EWI.

Maintain BUY with Target Price of RM1.68. We maintain our earnings estimate and TP of RM1.68. Our TP is based on Price-to-RNAV (PRNAV) of 0.75x reflecting 0.5SD valuation above mean. Note that our TP and earnings forecast exclude the contribution from EWI pending the actual IPO. We continue to like ECOWLD for its excellent sales achievement, superior earnings growth prospects and strong branding. Catalyst will be the successful achievement of sales target and earnings delivery.

Source: MIDF Research - 9 Dec 2016