At least two local research houses have downgraded the Eco World Development Group Bhd (EWDG) counter, which posted a healthy set of topline numbers for its latest quarter, from ‘sell’ to ‘hold’ after a surge in its share price.
In a note released today (Sept 22), Kenanga Research said it has downgraded the counter to ‘market perform’ from ‘outperform’ after the recent run-up in its share price.
It said it has maintained the stock’s 52-week target-price of RM1.03 on an unchanged 50% discount to revalued net asset value (RNAV), compared to an average of 55% for its peers, given the group’s solid ability to push product launches.
Likewise, Maybank Investment Bank Bhd has also downgraded the counter to ‘hold’ given that a total return on the shares were below 10%. It upped the counter’s target price to RM1.12 from RM1.02.
The stock ended yesterday at RM1.10.
In an exchange filing yesterday, EWDG said its third quarter ended July 31, 023 (3Q23) rose 43% to RM66.34 million on the back of RM476.85 million in turnover.
For the first nine months, it posted a net profit of RM186.03 million, up 7.4% from the same period the previous year, on RM1.38 billion in turnover.
Kenanga Research said the nine-months net profit came in at 76% of its full-year forecast and 74% of consensus full-year estimate.
“With regards to the Johor market, the group emphasized that its properties are mostly supported by local buyers or Malaysians working in Singapore and likely for own-stay purposes as opposed to investment. They have not actively marketed to foreigners given the already strong domestic demand but do not discount the possibility of exploring opportunities here,” it said.
In another report, CGS-CIMB Research has reiterated its ‘add’ call on the stock, with a target price of RM1.34, in view of EWDG’s diversified product range, low gearing ratio and decent dividend yields.
“We believe it [EWDG] is poised to ride the rise in demand for industrial products, as c.34% of its land bank is designated for industrial development,” it said.
EWDG declared a second interim dividend of 2 sen (3Q22: 1 sen) taking 9MFY23 dividend payout to 4 sen (9MFY22: 3 sen). –TMR