MIDF Research upgrades EcoWorld to 'buy' on attractive share price upside

• MIDF said EcoWorld recorded total new sales of RM3.6 billion in FY2023, slightly ahead of its new sales target of RM3.5 billion.

KUALA LUMPUR (Dec 15): MIDF Research has upgraded Eco World Development Group Bhd (EcoWorld) to “buy” at RM1, with an unchanged target price of RM1.14, and said the developer’s core net income of RM272.9 million for the financial year ended Oct 31, 2023 (FY2023) came in above consensus full-year expectations at 107%, but within MIDF’s estimate at 102%.

In a note on Friday, the research house fine-tuned its earnings forecasts for FY2024 by 6%, and for FY2025 by 5.8%, post release of full-year figures for FY2023.

New sales

MIDF said EcoWorld recorded total new sales of RM3.6 billion in FY2023, slightly ahead of its new sales target of RM3.5 billion.

It said eco-townships contributed the highest new sales at 43%, followed by eco-business parks at 29%.

“Looking ahead, EcoWorld has set a new sales target for FY2024 at RM3.5 billion, and expects sales to be driven by its townships, as well as high-rise and industrial projects in FY2024.

“Meanwhile, the balance sheet of EcoWorld is improving, with net gearing falling to 0.25 times in FY2023, from 0.31 times in FY2022, giving it financial muscle for future land banking exercises,” it said.

MIDF said it upgraded EcoWorld due to the attractive share price upside and attractive dividend yield of 6%.

“Besides, the new sales outlook is expected to remain solid, driven by industrial and residential projects.

“Meanwhile, potential land-banking exercises will further drive earnings growth in the near term,” it said.

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