MIDF Amanah Investment Bank (MIDF Research) has maintained its NEUTRAL rating on Eco World Development Group Bhd with an unchanged target price of RM2.01, following the company's memorandum of understanding (MOU) with SD Guthrie Bhd and NS Corp to jointly develop an industrial park in Bukit Pelandok, Negeri Sembilan.

Under the MOU, Eco World, SD Guthrie and NS Corp will collaboratively develop a 471-ha industrial park with an estimated gross development value of RM2.95 billion. Positioned within the Malaysian Vision Valley 2.0 (MVV 2.0) economic corridor, the industrial park will feature a mix of industrial lots, ready-built factories, and commercial properties targeting high-growth sectors such as aerospace, electrical and electronics, logistics and biotechnology. The development is expected to take place over the next eight years.

MIDF Research expressed a neutral-to-positive view on the strategic collaboration, which will expand Eco World's industrial property development portfolio. The research house highlighted that Eco World has been aiming to grow its industrial property division due to its expertise in the sector and the strong demand for industrial products in Malaysia. The company already has 977ha of land earmarked for industrial parks, which represent 27% of its total landbank.

Despite the positive outlook for the industrial park development, the research house maintained their earnings forecast for Eco World for the financial year 2025 forecasted (FY25F), FY26F and FY27F, pending further details on the MOU, such as the company's stake in the project and capital requirements. Eco World's net gearing, at 0.19 times as of 4QFY24, is considered healthy by the analyst, positioning the company well to expand its landbank further.

The research house noted that while the outlook for Eco World's earnings and net sales is expected to remain stable, the positives of the collaboration have already been largely priced into the company's stock, which is currently trading above its latest net tangible asset of RM1.66 per share.