by JAY SHEILA / Pic Source: ecoworld.my

ECO World Development Group Bhd, whose sales surprised to the upside thanks to the disposal of a hotel at Bukit Bintang City Centre (BBCC), has been retained with an ‘Outperform’ call by Kenanga Investment Bank Bhd.

“We like EcoWorld for its strong branding and nimble cost structure, enabling it to continue to fetch healthy sales and margins despite the still challenging industry landscape,” it said in a research note today.

It noted that the company’s results were within expectations, with the first nine months of financial year 2022’s (FY22) core net profit coming in at only 66% and 71% of its full-year forecast and the full-year consensus estimate, respectively.

However, it considered the results within expectation as it expected a stronger fourth quarter of FY22 on acceleration in progress billings as labour shortage eases and moderating losses.

It noted that EcoWorld’s first 10-month sales of RM3.44 billion beat its RM3.3 billion target and the company’s internal RM3.5 billion target, adding that the positive divergence due to the sale of a hotel at BBCC to UDA Holdings Bhd for RM295 million.

The research house raised their FY22F sales assumption to RM3.9 billion from RM3.3 billion. As of August, EcoWorld’s effective unbilled sales stood healthily at RM4.2 billion.

The report noted that EcoWorld was on the lookout to acquire new land banks to replenish their total remaining gross development value of around RM57 billion.