ECOWLD (8206) - Eco World Development Group Bhd - Pudu Jail joint venture finalised
Target RM3.02 (Stock Rating: ADD)
Eco World announced today that it is subscribing to 40% of BBCC Development, which is a joint venture to develop 19.4 acres of land at the former site of the Pudu Jail. This announcement is not a surprise but will nonetheless be viewed positively, given the prime location of the land in Kuala Lumpur, the reasonable land cost and the high GDV value of RM8bn. The landbanking increases the ex-rights with free warrants RNAV from RM2.73 to RM2.79, and our target price rises accordingly. Eco World remains an Add with an unchanged target price basis of 20% discount to RNAV. No changes to our EPS forecasts, as details of the development have yet to be finalised. Eco World remains one of our top picks and its aggressive landbanking and strong sales are the key catalysts.
What Happened
BBCC Development has entered into a joint venture agreement with UDA Holdings, the land owner of the 19.4 acres of leasehold land, to undertake a mixed residential and commercial development comprising a retail mall, an entertainment block, strata offices, office towers, a hotel and service residences. UDA shall grant BBCC Development the rights to carry out the development for RM1.01bn, which works out to be an effective land cost of RM1,200 psf. Eco World will take the lead in the project and is targeting to launch strata offices by end-2015 or early-2016.
What We Think
The announcement does not come as a surprise as reports of the joint venture were first captured by the press and confirmed by Eco World in mid-2014. Nonetheless, we view the finalisation positively as it will set in motion the development of an iconic project in the heart of the shopping district in Kuala Lumpur. It is rare to secure such a large tract of land in the city centre and given the strong branding and following enjoyed by Eco World, we believe the project will be a success. Furthermore, we consider the effective land cost of RM1,200 psf as low, given that prices are nearly double or even triple that in areas closer to or within KLCC.
What You Should Do
Investors should continue accumulating Eco World. The group is not done with its landbanking and has yet to finalise the acquisition of 470 acres of land in Batu Kawan, Penang. This will be another large project and a catalyst to its share price.
Source: CIMB Daybreak - 05 February 2015
Target RM3.02 (Stock Rating: ADD)
Eco World announced today that it is subscribing to 40% of BBCC Development, which is a joint venture to develop 19.4 acres of land at the former site of the Pudu Jail. This announcement is not a surprise but will nonetheless be viewed positively, given the prime location of the land in Kuala Lumpur, the reasonable land cost and the high GDV value of RM8bn. The landbanking increases the ex-rights with free warrants RNAV from RM2.73 to RM2.79, and our target price rises accordingly. Eco World remains an Add with an unchanged target price basis of 20% discount to RNAV. No changes to our EPS forecasts, as details of the development have yet to be finalised. Eco World remains one of our top picks and its aggressive landbanking and strong sales are the key catalysts.
What Happened
BBCC Development has entered into a joint venture agreement with UDA Holdings, the land owner of the 19.4 acres of leasehold land, to undertake a mixed residential and commercial development comprising a retail mall, an entertainment block, strata offices, office towers, a hotel and service residences. UDA shall grant BBCC Development the rights to carry out the development for RM1.01bn, which works out to be an effective land cost of RM1,200 psf. Eco World will take the lead in the project and is targeting to launch strata offices by end-2015 or early-2016.
What We Think
The announcement does not come as a surprise as reports of the joint venture were first captured by the press and confirmed by Eco World in mid-2014. Nonetheless, we view the finalisation positively as it will set in motion the development of an iconic project in the heart of the shopping district in Kuala Lumpur. It is rare to secure such a large tract of land in the city centre and given the strong branding and following enjoyed by Eco World, we believe the project will be a success. Furthermore, we consider the effective land cost of RM1,200 psf as low, given that prices are nearly double or even triple that in areas closer to or within KLCC.
What You Should Do
Investors should continue accumulating Eco World. The group is not done with its landbanking and has yet to finalise the acquisition of 470 acres of land in Batu Kawan, Penang. This will be another large project and a catalyst to its share price.
Source: CIMB Daybreak - 05 February 2015
