ECOWLD: Strategic Landbank Expansion Poised to Boost Long-Term Prospects, Buy Rating Affirmed
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading property developer has significantly expanded its landbank with a major acquisition and joint venture (JV) in Iskandar Malaysia, a move anticipated to drive substantial long-term growth and solidify its market position. This strategic initiative has led investment bank, TA SECURITIES, to reiterate a BUY recommendation for the stock.
Strategic Land Acquisition and Partnership
The company has entered into a strategic partnership to develop 935 acres of land in Kulai, Johor, into the Eco Business Park 8 industrial project. This venture is a collaboration with Permodalan Darul Ta’zim (PDT) and SD Guthrie (SDG MK). Concurrently, the developer is acquiring the freehold land from SDG for a total cash consideration of MYR814.8 million. Under the agreement, the company will hold a 65% stake in the JV, with SDG holding 25% and PDT 10%.
Rationale and Future Potential
This substantial land acquisition addresses the company’s depleting landbank and leverages the burgeoning demand for industrial properties in Iskandar Malaysia. The region benefits from strong foreign and local direct investments, enhanced cross-border connectivity, and incentives under the Johor-Singapore Special Economic Zone. The acquired land is strategically located near Senai International Airport and the North-South Expressway, positioning the future Eco Business Park 8 project as a key driver for industrial property sales in the area.
While the purchase consideration of MYR20 per square foot is higher than previous acquisitions, it is deemed reasonable given the escalating land prices in Johor. The payment terms are also manageable, supported by a recent significant land sale.
The new industrial park project is projected to have a Gross Development Value (GDV) of MYR3.75 billion over an 8-10 year development period. The acquisition is expected to be completed in the second half of 2026, with the project launch slated for 2027.
Earnings Outlook and Recommendation
Despite the significant strategic move, the investment bank has maintained its earnings forecasts, acknowledging that the project’s launch in 2027 means its financial impact will be realized over the longer term. The target price remains aligned with the company’s revalued net asset value (RNAV) per share. TA SECURITIES affirms its BUY recommendation, with an updated target price of RM0.25, representing a 25.0% upside from the last traded price of RM0.20.
