Research houses bullish on Eco World’s Johor land acquisition
Published on: Friday, January 19, 2024
By: Bernama
Eco World’s recent Iskandar Puteri acquisition is set to replenish its depleting landbank in Johor, says Maybank IB. (Wikipedia pic)
PETALING JAYA: Amanah Investment Bank Bhd viewed positively Eco World Development Group Bhd’s wholly owned subsidiary, Eco Botanic 3 Sdn Bhd’s (EB3SB) land acquisition in Iskandar Malaysia as it allows the group to strengthen its presence in Johor.
EB3SB has entered into a conditional development agreement with Permodalan Darul Ta’zim Sdn Bhd (PDT) to acquire 97.25 hectares (240.31 acres) in Iskandar Malaysia for a purchase consideration of RM450.1 million.
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Besides this, EB3SB also entered into a conditional sale and purchase agreement with River Retreat Sdn Bhd to acquire the freehold land. River Retreat is owned by Iskandar Investment Bhd and Iskandar Waterfront Holdings.
In a statement, MIDF Amanah said the proposed acquisition is expected to be completed by end-2024.
“The land is located next to Eco World’s Eco Botanic and Eco Botanic 2 townships in Iskandar Malaysia. Eco World plans to develop the land into a mixed residential and commercial township development, to be known as Eco Botanic 3.
“The estimated gross domestic value for the project is RM3.88 billion,” it said.
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MIDF Amanah has upgraded the stock to “buy” from “neutral”, with a revised target price (TP) of RM1.33 from RM1.30 previously after factoring in Eco Botanic 3’s contribution.
“We make no changes to our earnings forecast for financial years (FY) 2024 to 2026,” it said.
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Maybank Investment Bank Bhd (Maybank IB) also stated that it is positive on Eco World’s latest acquisition in Iskandar Malaysia as it will help replenish its depleting landbank in Johor.
“It liked the deal for its fair pricing to Eco World, its strategic location with established amenities and staggered land cost payments, which will lower initial costs and reduce the burden on the developer’s balance sheet,” the research house said.
“The new project is expected to contribute to earnings from 2026 onwards.
“It has revised FY2025 and FY2026 earnings forecasts by (-0.1%) and (+2.4%), respectively, and raised a ‘buy’ call with a higher TP price of RM1.40,” it said.
As at 2.56pm, Eco World’s share price was down by 6 sen or 5.00% at RM1.26, giving it a market capitalisation of RM3.74 billion.
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