Eco World International's 3Q net profit plunges 93.39% to RM2.49 million on fewer units handed over

KUALA LUMPUR (Sept 17): Eco World International Bhd's (EWI) net profit for the third quarter ended July 31, 2021 (3QFY21) plunged 93.39% to RM2.49 million from RM37.63 million a year ago.

Quarterly revenue also slumped 79.34% to RM127.13 million from RM615.44 million a year ago, its filing with Bursa Malaysia showed.

The group said the lower earnings were mainly due to the lesser number of units sold to customers being handed over in the current quarter by its Australian projects as well as a lower share of profits from its UK joint ventures.

The group did not declare any dividend for the latest quarter.

For the nine-month period ended July 31, 2021, however, EWI saw its cumulative net profit rise 11.04% to RM69.83 million from RM62.89 million a year earlier, while its revenue fell 12.61% to RM537.97 million from RM615.6 million.

The group said in a statement that it recorded RM338 million sales in 3QFY21 and a further RM81 million in August 2021, bringing year-to-date sales to RM1.04 billion.

This, plus reserves of RM285 million, added up to a total of RM1.33 billion as at Aug 31, 2021.

"We continued to see steady improvement in sales in Australia and the UK in 3QFY21. Although Yarra One in Melbourne experienced some rescissions, sales in West Village, Parramatta picked up substantially.

"On a net basis, sales of our Australian projects jumped from A$500,000 in 2QFY21 to A$16 million in 3QFY21 on the back of buoyant local demand. In the UK, our sales grew by 5% in 3QFY21 compared to 2QFY21," said Datuk Teow Leong Seng, president and chief executive officer of EWI.

He stressed that demand from foreign and local buyers in London remained stable despite the introduction of an additional 2% stamp duty for foreign buyers in April 2021 and the expiry of stamp duty holiday in June 2021.

"FY21 has undoubtedly been challenging as new waves of infection swept through the group's main geographical markets of London, Sydney and Melbourne. Demand was also soft due to continued border closures. However, as we approach the end of this financial year and as the remaining lockdowns begin to be eased in tandem with rising vaccination rates, we are optimistic that market conditions will steadily improve," said Teow.

According to him, early indications of improving fundamentals can be seen with the house prices in Inner London, which were 2.5% higher than one year ago as at June 2021.

"We also believe that demand for residential property in London, a major employment centre, has room for further recovery, as more workers return to offices.

"Some anecdotal signs of stronger demand for residential property in London can be seen in the rental rate growth, which turned positive in 2QFY21 for the first time since before the pandemic," he added.

Over in Australia, Teow said house prices in Sydney and Melbourne rose by 5% in the 12-month period up to July 2021.

"While the price growth momentum and property transaction volume may be affected by the reintroduction of lockdown measures recently, low interest rates and lack of advertised supply could provide support to property prices," he said.

While construction, supply chain disruption and labour shortages are causing delays and driving cost pressures in the UK construction industry, he assured that construction progress of EWI's active projects in London is still largely on track.

The build-to-rent developments in Barking Wharf and Kew Bridge are expected to be completed in 2021, while the open-market-sales (OMS) units in the first phase of Embassy Gardens Block A03 are scheduled to commence handover in the current financial year.

Meanwhile, the OMS units in Millbrook Park Phase 2, Kew Bridge, Oxbow Phase 3B and Third & Caird are expected to be completed by FY22.

"All these upcoming completions will generate substantial cash inflow for the group following the handover of properties sold to customers," he said.

EWI's share price closed one sen or 1.92% higher at 53 sen today, valuing it at RM1.25 billion.

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