KUALA LUMPUR: EcoWorld Development Group Bhd’s earnings visibility remains strong, backed by the group’s solid unbilled sales and gradual reopening of the economy.
PublicInvest Research, in a report yesterday, said EcoWorld’s unbilled sales remained steady at RM4.1bil.
“The group’s earnings visibility remains healthy with unbilled sales still hovering at the RM4bil mark.
“Separately, its balance sheet continues to strengthen with net gearing levels falling from 0.62-times in 2020 to 0.51-times in the third quarter of 2021, with total borrowings lowered from RM3.32bil as at Oct 31, 2020 to RM2.99bil as at July 31, 2021.”
Additionally, the research house noted that property sales this year had been affected by the Covid-19 pandemic.
“We understand that sales are affected by closed borders due to the pandemic, although we are hopeful that easing of lockdowns in tandem with rising vaccination rates could help boost sales in coming months.”
EcoWorld reported robust sales growth in its third quarter ended July 31, 2021, boosted by its success in converting digital leads into purchases during the lockdown period.
Sales increased by more than RM1bil since the second quarter of 2021, enabling the group to surpass its full year target for this year of RM2.875bil.
Maybank Investment Bank Research noted that EcoWorld beat its 2021 sales goal in just 10 months.
“The impressive sales performance was driven by its new products that targetted the Middle 40 group and first time homebuyers, as well as pent-up demand amid a low interest rate environment.”
According to CGS-CIMB, EcoWorld’s project sites are operating at full capacity.
“We gather that 100% of its employees and more than 80% of site workers are fully vaccinated against Covid-19. EcoWorld expects to ramp up all its project sites to full capacity by end-September 2021, upon achieving high vaccination rates among its workers.”
CGS-CIMB said the lockdowns could cause delays in work progress of between a month to a-month-and-a-half for the group, adding that EcoWorld plans to catch up on site progress in the fourth quarter of its current financial year.
Meanwhile, EcoWorld’s international arm, EcoWorld International Bhd (EWI), reported RM338mil sales in the third quarter of 2021.
This lifted its year-to-date sales to RM1.04bil, plus reserves of RM285mil that added to RM1.33bil as of end-August.？
CGS-CIMB said EWI’s RM1.04bil new sales comprised RM968mil from its London projects and RM73mil from Australia.
“As at the end of August, EWI had a booking pipeline of RM285mil.
“We gather that its built-to-rent (BTR) project in the UK has been rescheduled to end-2021 or in 2022 from 2020 initially, due to lockdowns and the refining of development plans based on feedback from the local council and potential investors.
“The group retains its 2021 sales target at RM2.2bil, which could be a tall order without the BTR deal conclusion this year.”
The research house noted that EWI launched phase two of Embassy Gardens Block A03 in June 2021 and commenced the handover of phase one at end-August.
“Both phases are slated to complete by the first quarter of 2022,” said CGS-CIMB.