Eco World Development Group Bhd
(March 29, RM1.46)
Maintain buy with an unchanged target price of RM1.67: Eco World Development Group Bhd’s (EcoWorld) 40%-owned BBCC Development Sdn Bhd ([BBCCD] and remaining stake of 40:20 held by UDA Holdings Bhd:Employees Provident Fund) has entered into heads of terms agreements and memoranda of understanding (MoU) with Mitsui Fudosan (Asia) (MFA) and Zepp Hall Network for the development and leasing of a retail mall and a live concert hall respectively at its Bukit Bintang City Centre (BBCC) project.
MFA will next enter into a joint-venture (JV) agreement with BBCCD to jointly develop and operate the retail mall.
MFA will own a 50% stake in the JV company, EcoWorld with 12%, and BBCCD and UDA the remaining 38%.
We are positive on this latest development. In our view, the regional mall, to be run by the experienced MFA, and the live concert hall by Zepp Hall at the BBCC site will not only help to enhance the marketability, but also the pricing power of the development.
It will also help BBCC to differentiate itself from nearby projects such as Bandar Malaysia and the Tun Razak Exchange.
Elsewhere, BBCCD has also entered into a MoU with The Ascott Ltd. The latter will likely acquire or operate a serviced apartment tower there.
The involvement of foreign partners should help to enhance the BBCC development’s marketability. Also, it would help to lower the project’s overall sales risk.
We maintain our earnings forecasts for now pending the finalisation of the JV or lease agreements with MFA and Zepp Hall.
Management remains confident of achieving its RM3 billion sales target (excluding overseas projects via its associate company) for financial year 2016.
It is looking to launch 347 units of strata offices (RM500 million in gross development value) by May or June 2016, and 680 units of serviced apartments (RM700 million) by June or July this year at BBCC. — Maybank IB Research, March 28
ECOWLD (8206) - EcoWorld looks to launch strata offices, serviced apartments
http://www.theedgemarkets.com/my/article/ecoworld-looks-launch-strata-offices-serviced-apartments
