MAYBANK Investment Bank Bhd (Maybank IB) maintained its hold call on Eco World Development (ECW) with a target price of 42 sen, sustaining its earnings forecasts.
This was partly due to the success of ECW’s latest project, Eco Botanic 2 located in Iskandar Puteri that has an estimated gross development value (GDV) of RM300 mil – RM400 mil.
The project had an impressive booking of 80% in a weekend thanks to its affordable pricing and strategic location (nearby Eco Botanic’s commercial area and within EduCity vicinity), making management confident of the group achieving its FY10/20 sales target of RM2 bil.
The 600 units of landed terraces are targeted to first-time home buyers and the M40 group, with sizes ranging from 1,701 sq ft to 2,239 sq ft and are priced between RM460,000 to RM860,000 per unit.
“We were told that all the buyers, comprising locals and government servants working at Kota Iskandar, were pre-screened for mortgage loans before the unit selection. Hence, they stand a good chance to secure housing loans for their selected units,” Maybank IB said in a note yesterday. “Assuming 60% of the bookings to be converted into sales, we expect Eco Botanic 2 to chalk out about RM170 mil sales in FY10/20.”
“Our MYR0.42 TP is based on an unchanged 0.2x FY21 PBV (-2.5SD of mean). ECW currently trades at 0.25x PBV/0.17 PRNAV. As at July 2020, ECW’s unbilled sales stood at RM3.4 bil or 1.4x our FY21E revenue,” it added. – Oct 12, 2020