INVESTMENT HIGHLIGHTS

• JV with PowerChina Group to develop industrial park

• MOU with PowerChina to jointly bid for infrastructure projects in Malaysia

• Positive on the proposed JV

• Earnings forecasts maintained

• Maintain BUY with an unchanged TP of RM1.25

JV with PowerChina Group to develop industrial park. Eco World Development Group (ECOWLD) has signed a conditional joint-venture (JV) with PowerChina Group to jointly develop 117.35 acres Eco Business Park V, Phase 2. The JV company, known as EcoWorld PowerChina Business Park Sdn Bhd will purchase 117.35 acres of industrial land from Paragon Pinnacle Sdn Bhd (60% owned by ECOWLD and 40% owned by EPF) and jointly develop the land into an industrial project. Eco World PowerChina Business Park Sdn Bhd will be 60% owned by PowerChina and 40% owned by Paragon Pinnacle Sdn Bhd.

MOU with PowerChina to jointly bid for infrastructure projects in Malaysia. ECOWLD has also inked a Memorandum of Understanding (MOU) with PowerChina Group to jointly bid for infrastructure projects in Malaysia. The MOU may enable ECOWLD to take advantage of and leverage on the connectivity available and creating new business opportunities under China’s Belt & Road Initiative.

Positive on the proposed JV. We are positive on the proposed JV with ChinaPower Group as the JV could benefit business park project of ECOWLD by leveraging on extensive network of PowerChina’s clients who may be interested in investing in industrial real estate projects in Malaysia. Note that Eco Business Park V Phase 2 is complementary to the overall 518-acre Eco Business Park V (GDV: RM3.7b) located in Puncak Alam which is ECOWLD’s first business park in the Klang Valley.

Maintain BUY with an unchanged TP of RM1.25. We make no changes to our earnings forecasts. Our TP is maintained at RM1.25, based on 45% discount to RNAV. We maintain our BUY recommendation on ECOWLD as valuation of ECOWLD is attractive at 43% discount to latest book value of RM1.48 per share.

Source: MIDF Research - 17 Jun 2019