2015年4月15日星期三

Eco World Berhad - A Rising Star

Kenanga Research


We are initiating coverage on ECOWLD with a OUTPERFORM recommendation and TP of RM2.05. Our TP only offers a 16% total return albeit applying a property RNAV discount of 35% (peer average: 50%). The lower-than-sector average discount is for their:
(i) solid management team who are pioneers in property development, 
(ii) huge appetite for landbanking which will provide strong newsflow, 
(iii) ability to gain market share due to right product positioning as a township player and their experience with aggressive A&
Resilience is seen in their on-going projects as take-up rates for recent launches have been strong at 80%-100% vs. industry average of 50%-60% within the first 3 months of launch. This will result in strong earnings growth of 420%-344% in FY15E-FY16E. Although normalization of PERs may take up to FY17 as property contributions are still at an early stage while net gearing is expected to remain relatively high at 0.57x-0.65x over FY15-16E, we still like the stock as a longer-term value emerging stock given their aggressive growth path and the management team. Expect ECOWLD to be a ‘must-have’ stock as we will not be surprise if it becomes a market leader