KUALA LUMPUR (Dec 16): Eco World Development Group Bhd (EcoWorld)’s quarterly net profit was hit by impairment in the fourth quarter ended Oct 31, 2022 (4QFY2022), as it contracted to RM1.78 million compared with RM42.84 million a year ago.
Nonetheless, the property developer declared a third interim dividend of two sen per share, bringing the full-year total dividend to five sen per share.
EcoWorld noted that the marked improvement in key balance sheet metrics over the last three years have enabled it to afford a more generous dividend payment.
Its net borrowings dropped to RM1.46 billion as at Oct 30, compared with RM2.09 billion a year ago and RM2.86 billion at end-October 2021. The group’s net gearing ratio also fell to 0.31 times from 0.44 times, and 0.62 times at end-October 2021 and 2022 respectively.
EcoWorld’s earnings per share for 4QFY2022 declined to 0.06 sen, from 1.45 sen previously. Its quarterly revenue fell 16% to RM559.28 million, compared with RM666.05 million in 4QFY2021.
The impairment arose from its subsidiary Eco World International Bhd (EWI)’s EcoWorld Ballymore joint venture in London. EcoWorld said the group re-assessed the carrying value of its investment in EWI.
It said a higher weighted average cost of capital was applied to discount the estimated future cashflows from EWI, given the more than 200-basis point increase in the UK risk-free rates as at Oct 31, 2022, as compared to Oct 31, 2021.
Based on the reassessment, the group in turn recognised an impairment of RM81.0 million on its investment in EWI in 4QFY2022, in addition to the RM57.3 million recognised in FY2021, it added.
For the full financial year ended Oct 31 (FY2022), EcoWorld saw its net profit down by nearly 14% to RM157.21 million from RM182.74 million, despite revenue increasing marginally to RM2.044 billion from RM2.043 billion.
However, Malaysian operations generated a record high profit after tax (PAT) of RM281.3 million — the group’s highest ever PAT, 32% above the FY2021 PAT of RM212.8 million. EcoWorld attributed the improvement in the group’s gross profit margin from 20.7% in FY2021 to 24.0% in FY2022, to continued savings on selling and marketing expenses and reduction in finance costs, following repayments of borrowings.
Furthermore, EcoWorld achieved the highest ever sales of RM3.84 billion in FY2022, exceeding its sales target of RM3.5 billion and surpassing the previous record high of RM3.82 billion in FY2016.
In a separate statement, the group’s president and CEO Datuk Chang Khim Wah said the group’s next focus will be on launching more innovative products that meet the lifestyle needs of a multi-generational and multi-ethnic customer base.
“Products that have achieved sold-out success in the Klang Valley such as our ‘duduk’ series of apartments for young suburbanites will be further refined and also introduced to our customers in Iskandar Malaysia and Penang. Similarly, our ‘Co- Homes’ that have done very well in both the Klang Valley and Penang, will be launched in Iskandar Malaysia to offer the best of land and apartment living to our customers there,” Chang said.
“Our aim is to increase the numbers of sizable new industrialists at our business parks, as their presence can have a very positive catalytic effect to draw in other upstream and downstream businesses, thus accelerating overall value creation,” Chang explained. He added that the group will be maintaining its annual sales target at RM3.5 billion for FY2023.
EcoWorld’s share price was unchanged at 65 sen at noon break on Friday (Dec 16), with a market capitalisation at RM1.91 billion.