Hot Stock Eco World rises 5% after positive Maybank initiation note

by **Cals** Fri 23 May 2014, 00:13

Hot Stock Eco World rises 5% after positive Maybank initiation note

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Thursday, 22 May 2014 12:24

KUALA LUMPUR (May 22): Eco World Development Bhd rose as much as 5.2% after a positive initiation report by Maybank Investment Bank Bhd (Maybank IB).

Maybank IB has named Eco World as the new bellwether for the property sector. At 11.44am, Eco World was traded at RM5.05, up 22 sen or 4.6%.

Eco World’s share price had earlier risen as much as 25 sen or 5.2% to RM5.08. The stock was among top gainers on Bursa Malaysia.

Maybank IB initiated coverage on Eco World with a “buy” rating and a target price (TP) of RM6.40.

“With the acquisition of development rights for viable landbank and property development projects, Eco World is emerging as the new bellwether in the property space,” said Maybank IB.

Maybank IB highlighted Eco World's strong management team, strategically- located landbank, and potential land deals that will improve its revalued net asset value (RNAV).

Eco World is led by former executives of SP Setia Bhd. Tan Sri Liew Kee Sin, the former chief of SP Setia, is a non-independent non-executive director in Eco World.

“We see another “SP Setia” in the making and believe the same success formula will be replicated in Eco World,” said Maybank IB.

Under Liew’s leadership, SP Setia was built into one of the top property development companies in Malaysia, achieving RM8.24 billion in FY13 sales and RM9.6 billion in unbilled sales as at end-FY13.

Furthermore, Eco World will have total landbank of 1,794ha (4,433 acres) with a gross development value (GDV) of RM42.4 billion after the completion of land development rights and acquisitions.

Maybank IB said 47% of the GDV would be derived from the Klang Valley, 50% from Iskandar Malaysia, while the balance would come from Eco World's landbank in Penang.

The research house noted that Eco World has received an offer to acquire a 0.49ha (1.2 acres) land in Sydney, Australia for RM129 million.

Eco World is also participating in the request for proposal by Penang Development Corp, which is soliciting bids for a 189.8ha (469 acres) land in Penang.

“Apart from the above-mentioned potential acquisitions, management is also looking at a few pieces of land in Malaysia.

“Our back-of-the-envelope calculation shows that our RNAV estimate will be enhanced by 12 sen per share for every additional MYR5b GDV worth of project,” said Maybank IB.