MIDF Amanah Investment Bank Bhd (MIDF Research) has reiterated its NEUTRAL stance on Eco World Development Group Bhd with a revised target price of RM2.01, up from RM1.84. The research house cited stronger-than-expected earnings for the financial year of 2024 (FY24) as a key driver behind the adjustment, with core net earnings of RM354.2 million surpassing MIDF Research's estimates by 118%.
The group's FY24 performance was buoyed by higher progress billing in the fourth quarter, which led to a sequential increase in core net income to RM122.3 million, up 37.1% quarter-on-quarter. Revenue also saw a 21.3% improvement over the same period. Year-on-year, Eco World's 4QFY24 earnings were 38.1% higher, bringing total FY24 earnings to RM354.2 million, reflecting a robust 29.7% annual growth. MIDF Research attributed the earnings increase to contributions from ongoing projects, including newly launched developments and duduk projects, as well as cost savings from project closures.
The property developer achieved record new sales of RM4.07 billion in FY24, surpassing its target of RM3.5 billion. According to MIDF Research, 57% of these sales were attributed to residential projects, 16% to commercial projects, and 27% to industrial projects. The industrial segment, in particular, is expected to see expansion, driven by high demand for industrial products. Eco World has set a new sales target of RM3.5 billion for FY25.
Dividend payouts also stood out, with a total of six sen per share declared for FY24, translating into a 3% dividend yield. Additionally, the group's net gearing improved to 0.19 times in 4QFY24 from 0.21 times in the previous quarter, reflecting a stronger financial position.
Looking ahead, MIDF Research revised its earnings forecasts for FY25 and FY26 upwards by 17% and 34%, respectively, to reflect higher progress billings.
