Ever wondered how property developers navigate today’s complex market, especially when their traditional revenue streams are drying up? Eco World International Berhad (EWI) has just released its interim financial report for the second quarter ended 30 April 2025 (2Q FY2025), and it tells a fascinating story of strategic adaptation and a significant turnaround in profitability for the quarter.
While the company recorded no direct revenue in this quarter, a remarkable shift from a loss to a profit caught our attention. This report highlights EWI’s resilience and strategic pivots in a challenging global real estate landscape. Let’s dive into the numbers and explore what’s driving these changes.
A Quarter of Turnaround: Q2 FY2025 Highlights
For the three months ended 30 April 2025, Eco World International made a notable comeback, posting a profit before tax (PBT) and profit after tax (PAT) attributable to owners, a significant improvement compared to the same period last year. This turnaround occurred despite the absence of direct revenue, as the Group’s residential projects in Australia were fully sold in FY2024, and new launches are currently on hold pending market assessment.
3 Months Ended 30 April 2025
Profit Before Tax: RM2.44 million
Profit Attributable to Owners: RM2.28 million
Basic Earnings Per Share: 0.10 sen
3 Months Ended 30 April 2024
Loss Before Tax: RM(13.87) million
Loss Attributable to Owners: RM(14.13) million
Basic Loss Per Share: (0.59) sen
This impressive swing from a loss of RM13.87 million to a profit of RM2.44 million in profit before tax for the current quarter was primarily driven by several key factors:
- Reduced Impairment Loss: A lower impairment loss on amounts owed by Eco World London, as the joint venture recognised fewer losses.
- Cost Efficiency: Lower administrative and general expenses due to declining staff costs from reduced operational activities.
- Foreign Exchange Gains: Higher foreign exchange gains, boosted by increased repayments of shareholder advances from joint ventures.
- Joint Venture Performance: A higher share of profits from Eco World-Ballymore, which recorded improved profits thanks to a product mix with higher profit margins.
Year-to-Date Performance: Still in the Red, But Improving
Looking at the year-to-date performance for the six months ended 30 April 2025, while the Group still recorded a loss, the figures show a substantial improvement compared to the previous corresponding period. This indicates a positive trajectory, even as EWI navigates a period of no direct revenue from its completed projects.
6 Months Ended 30 April 2025
Loss Before Tax: RM(1.26) million
Loss Attributable to Owners: RM(1.46) million
Basic Loss Per Share: (0.06) sen
6 Months Ended 30 April 2024
Loss Before Tax: RM(12.34) million
Loss Attributable to Owners: RM(13.95) million
Basic Loss Per Share: (0.58) sen
The reduction in the year-to-date loss was largely attributed to the same factors that drove the quarterly profit: lower impairment losses on amounts owing by Eco World London and reduced administrative and general expenses. However, these positive effects were partially offset by the absence of direct revenue and lower foreign exchange gains due to a weaker British Pound against the Ringgit Malaysia.
Financial Health Check: Assets, Cash Flow, and Dividends
EWI’s balance sheet as at 30 April 2025 shows total assets at RM1.17 billion, a decrease from RM1.30 billion at 31 October 2024. Similarly, total equity decreased to RM1.17 billion from RM1.29 billion, leading to a net asset per share of RM0.49, down from RM0.54. This reduction is largely influenced by the repayment of advances from joint ventures and dividend payments.
From a cash flow perspective, the Group experienced a net cash outflow of RM13.05 million from operating activities for the six months ended 30 April 2025, a shift from the RM10.79 million generated in the previous corresponding period. However, a significant positive highlight comes from investing activities, which generated RM63.85 million in cash, largely due to RM60.52 million in net advances repaid by joint ventures. This indicates healthy repayments from EWI’s overseas projects. Financing activities saw a cash outflow of RM120.00 million, primarily due to the dividend payment to shareholders.
Speaking of dividends, while no new dividend was declared for the period ended 30 April 2025, the company did pay a final dividend of 5 sen per share, amounting to RM120 million, on 14 January 2025, for the financial year ended 31 October 2024. This demonstrates the company’s commitment to shareholder returns, even amidst a transitional phase.
Navigating the Headwinds: Risks and Strategic Outlook
Eco World International is actively adapting to the evolving property market. As of 31 May 2025, the Group recorded RM98 million in sales for the 7-month period, complemented by RM51 million in reserves, bringing total sales and reserves to RM149 million. The value of completed units still available for sale stands at approximately RM168 million, with a target to sell these units within the current financial year.
The London real estate market remains challenging, with house prices declining by 0.6% in the first quarter of 2025. High interest rates and geopolitical tensions continue to dampen homebuyer sentiment. However, there’s a silver lining: occupational demand remains resilient, with private rental rates in London increasing by 1% in the first quarter of 2025, following a substantial 11% rise in 2024. Potential interest rate cuts by the Bank of England could further support housing affordability and potentially drive a recovery in home prices.
In response to these market dynamics, EWI is taking proactive steps:
- Strategic Refinement: The Group is refining development plans for its remaining projects in the UK and Australia to enhance feasibility.
- Asset Monetization: Exploring the monetization of certain assets with long gestation periods to raise funds.
- New Ventures: Actively assessing the feasibility of an industrial park development within JLG Investment Holdings Sdn Bhd’s Ibrahim Technopolis township in Johor, Malaysia. This could represent a strategic shift towards nearer-term revenue-generating opportunities in a different segment.
- Corporate Restructuring: Notably, the proposed change of the company name from “Eco World International Berhad” to “EWI Capital Berhad” was approved by shareholders on 24 June 2025, signaling a potential broader strategic repositioning for the company.
Summary and Investment Recommendations
Eco World International’s Q2 FY2025 report showcases a company in transition, demonstrating remarkable agility in navigating a challenging global property market. The shift to profitability in the latest quarter, driven by internal efficiencies and strong joint venture contributions, is a positive sign, even as the Group grapples with zero direct revenue from its core property development activities.
While the year-to-date performance still reflects a loss, the significant reduction in this loss indicates an improving trend. EWI’s strategic pivot towards asset monetization and exploring new avenues like industrial park development in Malaysia suggests a forward-thinking approach to diversify and stabilize its revenue streams. The healthy cash flow generated from joint venture repayments also provides some financial flexibility.
However, it’s important for investors to remain aware of the prevailing market conditions and inherent risks:
- The continued challenging market conditions in the UK property sector, including declining house prices and high interest rates, could impact future project viability.
- The company’s reliance on joint ventures for revenue and profit means its performance is intertwined with the success and operational efficiency of these partnerships.
- Uncertainty remains regarding the timing and impact of new project launches or the success of asset monetization efforts.
- Currency fluctuation risks, particularly between the British Pound and Ringgit Malaysia, can affect reported earnings and asset values given EWI’s international operations.
From a professional standpoint, EWI appears to be making prudent strategic adjustments in a tough environment. The move to explore new development opportunities, particularly in industrial parks, and the broader corporate name change to “EWI Capital Berhad,” could be a proactive step to unlock value and reposition the company for future growth beyond traditional residential developments.
Given EWI’s strategic pivots and the evolving market landscape, do you believe these changes will pave the way for sustained profitability and growth in the coming years? Share your thoughts in the comments below!
