EcoWorld posts lower 2Q net profit due to MCO, but sees big rebound in sales during CMCO

KUALA LUMPUR (June 25): Eco World Development Group Bhd’s (EcoWorld's) net profit fell 48% to RM21.39 million in the second quarter ended April 30, 2020 (2QFY20) compared with RM41.17 million previously as a result of the quieter period during the movement control order (MCO).

In a statement today, the property developer said the mandatory closure of all its sales galleries and construction sites throughout the MCO period affected earnings, with revenue falling 36.4% to RM345.4 million from RM543.18 million a year ago.

However, the group experienced a significant rebound in sales and bookings which exceeded RM1 billion since the conditional movement control order (CMCO) started on May 4, it said.

As at June 15, 2020, its sales for the current financial year FY20 have reached RM975 million.

In addition, the group said it also hoping to convert a pipeline of bookings of RM600 million into sales over the next few months.

Net profit for the first half of the financial year ending Oct 31, 2020 fell 23.19% to RM54.91 million versus RM71.49 million, as revenue also fell 14.6% to RM883.35 million versus RM1.03 billion a year ago.

With regard to the group’s prospects for the rest of the financial year, its president and chief executive officer Datuk Chang Khim Wah believes that the strong momentum since the start of the CMCO will be sustained.

“The announcement of the Penjana incentives for the property sector on June 5, 2020 including the re-introduction of the Home Ownership Campaign definitely contributed towards the strong uptick in interest. Despite the many challenges experienced by the sector and economy, we were pleased to note that buying interest remains strong,” he said.

Chang added that the group is working towards launching two new projects by the year end namely Huni @ Eco Ardence and Se.Ruang @ Eco Sanctuary, comprising 1,000 sq ft semi-furnished apartments priced below RM400,000.

Meanwhile, sales of the group’s unit Eco World International Bhd (EWI) improved during the second quarter under review despite various Covid-19 measures imposed in both the UK and Australia, it said.

“Sales momentum gained further strength in the first six weeks of 3QFY20, bringing total year-to-date sales as at June 15, 2020 to RM808 million,” it said.

EWI reported a net profit of RM20.06 million in 2QFY20 compared to a net loss of RM11.98 million previously. Revenue stood at RM113,000 versus a revenue of nil last year.

This is mainly due to completion and handover of higher numbers of units sold to customers, as well as revenue and profit recognition of EcoWorld London’s built-to-rent sales, it said.

“The group’s mid-market projects under EcoWorld London have enjoyed resilient local demand throughout. International demand is also on the rise for its other UK projects with recent strong buying from Hong Kong as well as growing interest from other global markets,” it said.

EWI expects a significant portion of its effective future revenue of close to RM4.6 billion as at June 15, 2020 to be translated into earnings within FY20 and FY21.

On the completions front, it said EWI recently started handing over its West Village, Australia project in early June 2020.

Following a two- to three-month slowdown in site progress due to Covid-19 preventive measures, it said works have fully resumed in both UK and Australia, and the group now targets to commence handing over of units at Wardian, London and Yarra One, Melbourne beginning in 4QFY20 and continuing through 1QFY21.

Shares of EcoWorld have lost some 44.3% this year. The counter closed at 41.5 sen for a market capitalisation of RM1.22 billion.

Meanwhile, EWI lost 52.7% this year, and closed at 43.5 sen today, valuing it at RM1.04 billion.