KUALA LUMPUR (March 30): Eco World Development Group Bhd’s (EcoWorld) net profit for the first quarter ended Jan 31, 2018 (1QFY18), shrank 79% year-on-year (y-o-y) to RM24.09 million from RM116.17 million, largely because the previous year had benefited from a RM94.8 million disposal gain.
The group’s quarterly revenue also retreated 5% y-o-y to RM563.59 million from RM592.71 million, due to the handover of progressively completed properties in several projects.
But excluding the impact of the disposal gain and lower interest expense to finance the group’s investments in joint ventures (JVs) in 1QFY17 — as the group acquired its 27% stake in Eco World International Bhd in 2QFY17 — the group recorded a 29.6% y-o-y rise in quarterly core earnings before interest and tax (EBIT) to RM62.6 million from RM48.3 million.
This was due to lower selling, marketing and administrative expenses, as well as higher profits from its Malaysian JVs, EcoWorld said in a stock exchange filing yesterday.
In a statement, EcoWorld president and chief executive Datuk Chang Kim Wah said the group’s underlying business fundamentals remain strong, as attested to by the core earnings growth. “This positive trend, supported by our high effective share of unbilled sales of RM6.2 billion as at 1Q 2018, should continue as more of our JV projects reach the level of construction works required to enable profit recognition to commence.”
Cumulative sales in the four months ended Feb 28, however, was lower than the corresponding period last year, at RM602 million. EcoWorld attributed the slide to “consistently slower sales” in the lead up to Christmas until Chinese New Year (CNY), adding that the continued difficulties buyers faced in obtaining the margin of finance needed also resulted in higher sales cancellations.
But the market has been seeing a marked pick-up in sales interest after CNY, Chang said.
EcoWorld is also preparing to see the maiden handover of properties at Eco Sanctuary in the Klang Valley, Eco Meadows in Penang and Eco Business Park III in Iskandar Malaysia. The group will also continue to deliver subsequent phases of properties sold in other projects.
In addition, EcoWorld will soon launch a campaign to celebrate the brand’s fifth anniversary, which “will showcase not just what we have already achieved to date but also the exciting new initiatives we have in store for our buyers,” Chang said.
Premised on the above, the group is keeping its RM3.5 billion sales target for its Malaysian projects.
It believes its sizeable and increasingly mature landbank in Malaysia, along with the brand’s growing presence in the UK, will contribute positively to its future prospects.
“With 18 out of 20 projects in Malaysia already launched and six new projects in the UK, the group is well-positioned to grow from strength to strength as it works to further unlock the value of its Malaysian landbank and increase the breadth, depth and resilience of its overseas business under EWI,” it added.
This article first appeared in The Edge Financial Daily, on March 30, 2018.