Eco World Johor land purchase positive for developer – research houses

KUALA LUMPUR: Eco World Development Group Bhd wholly owned subsidiary Eco Botanic 3 Sdn Bhd (EB3SB) has entered into a conditional development agreement with Permodalan Darul Ta’zim Sdn Bhd (PDT) to acquire 97.25 hectares (240.31 acres) in Iskandar Malaysia for a purchase consideration of RM450.1 million.

EB3SB also entered into a conditional sale and purchase agreement with River Retreat Sdn Bhd to acquire the freehold land. River Retreat is owned by Iskandar Investment Bhd and Iskandar Waterfront Holdings.

In a note today, MIDF Amanah Investment Bank Bhd said the proposed acquisition is expected to complete by end-2024.

“We view the acquisition positively as it allows Eco World to strengthen its presence in Johor.

“The land is located next to Eco World’s Eco Botanic and Eco Botanic 2 townships in Iskandar Malaysia. Eco World plans to develop the land into a mixed residential and commercial township development, to be known as Eco Botanic 3. The estimated gross domestic value for the project is RM3.88 billion,” it said.

MIDF has upgraded the stock to “buy” from “neutral”, with a revised target price (TP) of RM1.33 from RM1.30 previously after factoring in Eco Botanic 3 contribution.

“We make no changes to our earnings forecast for financial year (FY) 2024 to 2026,” the research house said.

Meanwhile, Maybank Investment Bank Bhd said in a note that it is positive on Eco World’s latest acquisition in Iskandar Puteri as it will help replenish its depleting landbank in Johor.

“It liked the deal for its fair pricing to Eco World, its strategic location with established amenities and staggered land cost payments, which will lower initial costs and reduce the burden on the developer’s balance sheet,” the research house said.

The new project is expected to contribute to earnings from 2026 onwards. It has revised FY2025 and FY2026 earnings forecasts by -0.1 per cent and +2.4 per cent, respectively, and raised a “buy” call with a higher TP price of RM1.40, it said.

At 10.15 am, the counter was up by four sen to RM1.24 with 1.83 million shares traded. – BK