CIMB Equities Research has raised the target price for eco World Development from RM8 to RM8.15, which is a hefty 57.9% over the last traded price of RM5.16.
It said on Thursday Eco World has made the headlines in recent months due to the group's hugely successful launches and aggressive landbanking. This should not be a surprise given that the company has the best people from the property industry, as well as the biggest ambitions.
“We cut our FY14 EPS forecast by 55% to factor in no launches from existing projects but retain FY15/16 numbers. Our implied target price (still based on parity with RNAV) rises after revising its RNAV for the surplus value from the new Semenyih landbank,” it said.
CIMB Research said Eco World remains an Add and one of its top sector picks, with the asset injection exercise and landbanking being the key catalysts.
“Since we initiated coverage on the stock in May, Eco World has been working overtime on launching new projects and acquiring new landbank,” it pointed out.
CIMB Research said Eco World undertook a major simultaneous launch in two of its projects – one in the Klang Valley and the other in Johor – to overwhelming response.
The Klang Valley project achieved 95% bookings while the non-Bumi portion in Johor was 85% booked on the day of launch. This should add RM600mil to RM700mil in sales to the group, lifting YTD new sales to RM1.7bil to RM1.8bil.
The research house said in just the last two months, Eco World has secured two landbank, one in Sydney and 493 acres in Selangor. The combined GDV of the two projects is RM4.4bil to RM4.5bil.
“Also, it was quoted in the press that Eco World has secured a RM7bil GDV joint venture to redevelop the Pudu Jail land and a 470-acre land in Batu Kawan, Penang, that will be developed into a mixed-residential golf course project.
“We estimate that these four projects will boost group GDV by around RM20bil to nearly RM63bil. This would put Eco World behind only UEM Sunrise and SP Setia.
“Since our initiation, we have had to explain to investors that Eco World is not a low P/E or high yield play. Instead, Eco World is an RNAV and newsflow play. We expect Eco World to replicate SP Setia's sterling 20-year track record, but within a much shorter period as it is in a hurry to build scale and size,” it said.
