EcoWorld's 4QFY24 core net profit of MYR121m and FY24 locked-in property sales of MYR4.07b exceeded both Maybank IB's and consensus estimates, the management has set a conservative FY25 sales target of MYR3.5b.

The house has revised its FY25-26E earnings forecasts by -5% to +17%. with a new TP of MYR2.25 based on 1.3x FY25E P/B (+3.5SD of mean; from 1.1x or +2.5SD), with the re-rating to reflect expectations of higher data center developments in Quantum Edge and Eco Business Park V.

Ending the year with a strong set of results
Excl. one-offs (MYR38m impairment loss on investment in ECWI MK [HOLD, CP: MYR0.335, TP: MYR0.27], a MYR5.3m impairment of right-of-use assets and a MYR1.2m disposal gain), ECW's 4QFY24 core net profit of MYR120.9m lifted FY24 core net profit to MYR346.6m, beating consensus estimates by 20%/16%. The outperformance was due to better than-expected margins, with gross margin improving to 27% from cost savings on completed and near-completion phases. A final DPS of 2 sen fell short says Maybank IB as ECW aims to conserve cash for land banking.

Record high sales in FY24
ECW achieved a record MYR4.07b in FY24 property sales, surpassing its targets by 16%/4%. Sales were driven by industrial parks, townships, high-rises, and shops. ECW has set a conservative FY25 sales target of MYR3.5b as it awaits the completion of 3 land acquisitions. Unbilled sales were MYR3.96b as at Oct 2024, or 1.3x of FY25E revenue

Earnings adjustments
Maybank IB has revised its FY25/26E earnings forecast by -5%/+17% after factoring in FY24 actual results, FY25 sales assumption of MYR3.9b, 80%/20% recognition of the Microsoft land sale in FY25/26E, higher margin assumptions for business parks and mature townships, Eco Forest 2 and a new project in Eco Sanctuary; and higher loss projections for ECWI. ECW aims to grow its investment properties for recurring income. In end-Oct 2024, net gearing was 0.19x, vs. 0.21x in end-3QFY24.