Research houses have mixed views on Eco World Development Group Bhd's latest acquisition of 343ha of freehold land in Semenyih for RM742.4 million which will be developed into Eco Forest 2 to meet the demand for residential properties, particularly for first-time homebuyers and upgraders, in the growing Semenyih market.

Although the strategic move is considered positive as it addresses Eco World's diminishing landbank and sets the stage for further growth, MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained a NEUTRAL stance on the property developer.

The research house said although Eco World is well-positioned to capitalise on the growing demand for landed housing, the upside is limited due to its current valuation being above its net tangible asset.

Despite that, MIDF Research has revised the company's target price (TP) to RM1.84 from RM1.81, reflecting the potential of Eco Forest 2 and how the land acquisition will further strengthen its foothold in the region while ensuring a stable sales outlook.

On the other hand, Maybank Investment Bank Bhd (Maybank IB) has issued a BUY call for Eco World's latest acquisition with a TP at RM1.96.

The research house views the land purchase favourably due to its fair pricing and the long-term prospects it offers.

Maybank IB highlighted that although the purchase price of RM20.1 per sq ft is higher than Mah Sing Group's recent acquisition in Semenyih, it is still below the current market rate.

The research house said the land acquisition will increase Eco World's gross development value by 27% and expand its landbank by 9%.

Maybank IB expects Eco Forest 2 to generate an annual net profit of RM56.6 million from FY26 onwards, assuming a 20% pretax margin, providing a solid foundation for future growth.

Eco World's stock, which closed at RM1.81 on Nov 7 2024, is projected to see a modest upside, representing an 8% potential return.