EcoWorld Malaysia’s Q2 FY2025: A Deep Dive into Robust Growth Amidst Strategic Shifts
Greetings, fellow Malaysian retail investors! Today, we’re unboxing the latest financial report from **Eco World Development Group Berhad (EcoWorld Malaysia)** for the second quarter ended 30 April 2025. This report isn’t just about numbers; it tells a compelling story of significant growth, strategic expansions, and noteworthy accounting adjustments that every investor should understand. Prepare to be impressed by their profit surge and ambitious land bank additions, but also note the key factors influencing their balance sheet.
Headline Grab: EcoWorld Malaysia delivered an astounding 85.3% jump in net profit for Q2 FY2025, driven by strategic consolidations and a landmark industrial land sale. The Group also declared a second interim dividend of 2 sen per share, bringing the year-to-date total to 3 sen!
Core Data Highlights: Unpacking the Performance
EcoWorld Malaysia has reported a strong performance for both the quarter and the first half of its financial year, demonstrating robust operational execution and the positive impact of recent strategic initiatives.
Quarterly Performance (Q2 FY2025 vs. Q2 FY2024)
The second quarter saw a substantial increase in key financial metrics:
Q2 FY2025
Revenue: RM878.2 million
Gross Profit: RM264.8 million
Profit Before Tax (PBT): RM198.8 million
Profit After Tax (PAT): RM129.8 million
Basic Earnings Per Share: 4.38 sen
Gross Profit Margin: 30.2%
Q2 FY2024
Revenue: RM555.8 million
Gross Profit: RM147.5 million
Profit Before Tax (PBT): RM98.5 million
Profit After Tax (PAT): RM70.0 million
Basic Earnings Per Share: 2.38 sen
Gross Profit Margin: 26.5%
Revenue soared by 58.0%, and gross profit jumped by 79.6% compared to the same period last year. This translated into a remarkable 100.3% increase in PBT and an 85.3% surge in PAT, significantly boosting earnings per share.
Year-to-Date Performance (6 Months FY2025 vs. 6 Months FY2024)
The positive momentum continued into the first half of the financial year:
6 Months FY2025
Revenue: RM1,417.8 million
Gross Profit: RM418.0 million
Profit After Tax (PAT): RM210.1 million
Gross Profit Margin: 29.5%
6 Months FY2024
Revenue: RM1,093.5 million
Gross Profit: RM275.8 million
Profit After Tax (PAT): RM139.7 million
Gross Profit Margin: 25.2%
For the first six months, revenue grew by 29.7% and gross profit by 51.5%, leading to a 50.4% increase in PAT. The gross profit margin also saw a healthy improvement from 25.2% to 29.5%.
Key Drivers Behind the Growth
The report attributes this strong performance primarily to two major factors:
- Paragon Pinnacle Sdn. Bhd. Consolidation: EcoWorld Malaysia acquired the remaining 40% equity interest in Paragon Pinnacle, the developer of Eco Grandeur and Eco Business Park V. This move, completed on 18 February 2025, led to the full consolidation of Paragon Pinnacle’s financial results into the Group, significantly boosting revenue and gross profit.
- Land Sale to Microsoft: The completion of the sale of 123 acres of industrial land at the QUANTUM Edge business park to Microsoft Payments (Malaysia) Sdn. Bhd. allowed for substantial revenue and profit recognition in Q2 FY2025.
Additionally, ongoing projects like Eco Botanic, Eco Spring, and Eco Business Park I & III in Iskandar Malaysia, as well as Eco Majestic and Eco Sanctuary in the Klang Valley, continued to contribute steadily. The Group also achieved general cost savings across several projects.
Joint Ventures Performance
The Group’s share of results from its joint ventures for the 6 months ended 30 April 2025 was RM30.3 million, a slight decrease from RM31.3 million in the same period last year. This was mainly due to Eco Grandeur and Eco Business Park V (previously joint ventures) now being fully consolidated as subsidiaries. Key contributors from the remaining joint ventures included Eco Ardence, Bukit Bintang City Centre (BBCC), and Eco Horizon.
Noteworthy Non-Cash Accounting Adjustments
The quarter’s results also included some significant non-cash accounting items:
- Gain on deemed disposal and acquisition of a joint venture: A gain of RM174.0 million was recognised from the revaluation of Paragon Pinnacle when it became a 100% subsidiary.
- Loss on deemed disposal of an associate: A loss of RM91.0 million was recorded following the reclassification of EcoWorld International Berhad (EWI) from an associate to a simple investment. This occurred after EcoWorld Malaysia ceased to have significant influence over EWI’s operations.
- Impairment loss on investment in a joint venture: An impairment of RM68.0 million was recognised on the investment in BBCC Development Sdn. Bhd. This was due to the deferral of launch plans for remaining parcels, including the 88-storey Signature Tower, allowing more time for the new TUAH 1895 food and lifestyle hub to drive demand and potentially higher future launch prices. However, from an accounting perspective, this deferral resulted in a longer discounting period for fair value assessment.
Collectively, these non-cash items resulted in a net accounting gain of RM15.1 million for the quarter.
Comparison to Previous Quarter (Q2 FY2025 vs. Q1 FY2025)
Comparing the current quarter to the immediate preceding quarter (Q1 FY2025), EcoWorld Malaysia showed substantial sequential improvement:
Q2 FY2025
Revenue: RM878.2 million
Gross Profit: RM264.8 million
Profit After Tax (PAT): RM129.8 million
Q1 FY2025
Revenue: RM539.6 million
Gross Profit: RM153.2 million
Profit After Tax (PAT): RM80.3 million
Revenue was higher by 62.7% and gross profit by 72.9%, primarily driven by the full consolidation of Paragon Pinnacle’s results and the contribution from the QUANTUM Edge land sale. PAT consequently increased by 61.6% compared to the previous quarter.
Strategic Outlook and Financial Health
EcoWorld Malaysia is not just delivering strong results; it’s actively shaping its future growth trajectory.
Robust Sales Performance
As at 31 May 2025, EcoWorld Malaysia achieved RM2.99 billion in sales for the first seven months of FY2025, representing an impressive 85% of its RM3.5 billion FY2025 sales target. Iskandar Malaysia projects led the way with RM1.67 billion (56% of total sales), followed by Klang Valley (34%) and Penang (10%).
The sales breakdown highlights the Group’s diversified portfolio:
| Revenue Pillar | Sales (RM million) | Market Segment | % of Total Sales |
|---|---|---|---|
| Eco Townships | 927 | Residential | 46% |
| Eco Rise | 432 | ||
| Eco Hubs | 430 | Commercial | 14% |
| Eco Business Parks | 240 | Industrial | 40% |
| QUANTUM | 960 | ||
| Total | 2,989 | 100% |
- Residential (Eco Townships & Eco Rise): Landed homes continued to perform strongly, with 84% of sales under Eco Townships priced above RM650,000, indicating robust demand for upgrader homes. ‘duduk’ apartments under Eco Rise also saw steady take-up.
- Commercial (Eco Hubs): Sales were 83% higher than the corresponding period last year, boosted by new commercial units in Iskandar Malaysia.
- Industrial (Eco Business Parks & QUANTUM): This segment set a new record, with RM1.2 billion in combined sales, already surpassing FY2024’s full-year industrial sales. This reflects sustained local and global demand, including interest from high-tech and green-tech sectors. A notable sale includes 32.9 acres in Eco Business Park II to Deye New Energy Technology (Malaysia) Sdn. Bhd. for RM119 million.
Strategic Land Bank Expansion and Gearing
EcoWorld Malaysia is actively expanding its land bank to fuel future growth. A key development is the strategic partnership with SD Guthrie Berhad and NS Corporation to develop **Eco Business Park VII (EBP VII)** in Negeri Sembilan. This 1,195-acre site, with an estimated gross development value (GDV) of RM2.95 billion, marks the Group’s sixth business park and first in Negeri Sembilan, positioning it to capture the strong industrial demand. The Group’s total land bank as at 31 May 2025 stands at 11,020 acres, with 4,611 acres undeveloped.
Following active deployment of its balance sheet for these expansions, including the acquisition of 847.249 acres in Semenyih for the Eco Radiance township (RM742.4 million) and the full consolidation of Paragon Pinnacle’s borrowings, the Group’s net gearing increased to 0.55 times as at 30 April 2025 (from 0.19 times as at 31 October 2024).
However, this increased gearing is underpinned by a record high cash balance (including deposits and short-term funds) of RM1.76 billion. This is further supported by expected near-term cash collections of over RM1 billion from large industrial land sales and an all-time high future revenue of RM5.22 billion as at 31 May 2025, which provides strong earnings prospects and cash flow visibility. This robust financial position enables the Group to continue its commitment to shareholder returns.
Summary and Outlook
EcoWorld Malaysia’s Q2 FY2025 report showcases a company in a strong growth phase, driven by strategic acquisitions, significant land sales, and a diversified portfolio that continues to resonate with market demand. The substantial increase in revenue and profit highlights effective operational management and successful execution of expansion plans, particularly in the thriving industrial property segment.
The Group’s proactive approach to land bank expansion, exemplified by the new Eco Business Park VII project, positions it well for sustained future growth. While the increase in net gearing reflects these strategic investments, it is comfortably supported by a robust cash position and a record high future revenue, indicating healthy financial fundamentals.
The declaration of a second interim dividend further underscores the Group’s commitment to delivering value to its shareholders, reflecting confidence in its ongoing performance and future prospects.
Despite the overall positive trajectory, it is important for investors to consider the following points from the report:
- The financial results include non-cash accounting adjustments, such as the loss on deemed disposal of an associate (EWI) and the impairment loss on investment in a joint venture (BBCC). While these are explained by strategic or commercial decisions, they are significant items impacting the reported profit.
- The increase in net gearing to 0.55 times indicates a higher leverage compared to the previous financial year-end, a direct consequence of recent large-scale land acquisitions and consolidations. Although mitigated by strong cash reserves and future revenue, this is a metric to monitor.
Overall, EcoWorld Malaysia appears to be strategically navigating the property landscape, balancing aggressive expansion with prudent financial management. The emphasis on industrial properties and continued demand for their residential townships paints a positive picture for their operational performance.
What are your thoughts on EcoWorld Malaysia’s latest performance and strategic direction? Given these robust sales and ambitious expansion plans, do you believe EcoWorld Malaysia can maintain this growth momentum and continue to deliver consistent value to its shareholders in the coming years? Share your insights in the comments section below!
