EcoFirst targets RM240m sales on residential, township projects

The firm is discussing with the Selangor state govt to embark on its maiden affordable housing development


ECOFIRST Consolidated Bhd is expected to achieve RM240 million in sales for the financial year 2019 (FY19), with a sizeable contribution from its township development in Selangor; a residential development in Perak; and future projects that are in the pipeline.

Group CEO Datuk Tiong Kwing Hee said the projection also includes sales revenue derived from the group’s development in FY18, which currently stands at RM180 million.

“The 30% jump in our projection is not impossible, given the track record in the first phase of our township development in Selangor called the Ampang Ukay.

“The first phase is a mixed development and has been 95% sold. It has contributed to our earnings in FY18, while FY19 will be significantly contributed by the second phase,” he said at the announcement of EcoFirst’s financial results in Kuala Lumpur yesterday.

He added that the company’s residential project in Ipoh, namely Kondominium Kelab Golf, still has some inventories to be sold that will contribute to the next financial year’s earnings.

Tiong said Ampang Ukay is currently entering its second phase, which comprises residential development of a three-block condominium, with an estimated gross development value (GDV) of RM523 million.

“The residentials are priced at RM450 million and above, targeted at families with a mid-range income, and we are looking at 1,006 sq ft to 2,003 sq ft condominiums,” he said.

Ampang Ukay is a township project developed on two adjacent parcels of freehold land of 35.2ha.

The first 25.09ha was acquired in 2016 and the remaining 10.11ha was bought in October 2017. The project’s total estimated GDV is RM5 billion.

The 25-acre (10.11ha) parcel of land was purchased from Harta Villa Sdn Bhd, a subsidiary of IGB Corp Bhd, for a cash consideration of RM61.8 million.

The first phase of the development, Liberty, consists of mixed residential and retail developments, with a total GDV of RM606.8 million, while the second phase is slated for a fully residential project and expected to be launched in the second half of 2019 (2H19).

As for the soon to be implemented Sales and Services Tax (SST), Tiong said the tax will not have an impact in reducing the firm’s current development as the projects were constructed based on the Goods and Services Tax (GST) rate.

“Our construction cost for the first and second phases of Ampang Ukay, which are our current ongoing developments, had incorporated GST.

“However, some of the construction materials are expected to be exempted from SST, and thus will have an impact in our future development, such as the third phase of Ampang Ukay, which is expected to be launched by 2H20,” Tiong said.

He also noted that the firm is looking at establishing a dividend policy for the coming financial year, which is expected to be materialised within the next six months.

“We were planning for a new dividend policy. However, due to the losses in revenue this quarter, it failed to materialise.

“We will be looking at certain parameters based on Bursa Malaysia’s requirement to see how a new policy can be formed,” he said, adding that a committee will be formed to determine the policy rate.

At present, EcoFirst has 35.21ha of landbank available for the firm’s future plans to maximise its earnings.

“Apart from forming joint ventures, which has been identified as our capital raising strategy, we will be looking into acquiring more land, particularly within the Klang Valley, to develop more prime products, depending on the area of the land,” Tiong said.

Financial controller Tan Hun Lim said the firm is in an early stage of discussions with the Selangor state government to embark on its maiden affordable housing development.

EcoFirst’s net profit rose 7% to RM9 million in the fourth quarter ended May 31, 2018 (4Q18), from RM8.28 million a year ago, attributed to the sales from the first phase of its township development, Ampang Ukay. Quarterly revenue fell 7.35% to RM60.71 million from RM65.54 million registered in the same period last year.

Its earnings per share rose up 8.7% to RM1.12 in 4Q18 compared to RM1.03 a year ago. For the cumulative period of FY18, the group’s net profit surged 2.76 times to RM44.59 million from RM16.13 million a year ago, while revenue climbed 42.47% to RM181.23 million from RM127.205 million in FY17.