(Feb 23): Eco World International Bhd, which mainly develops real estate in the United Kingdom and Australia, said it aims to clear its inventory worth RM850 million and distribute excess cash for the financial year ending Oct 31, 2024.
Inflation in the UK has continued to exceed the Bank of England’s target in recent months, which risks further interest rate increases, Eco World International flagged in its annual report released on Friday. The company completed its Australian projects but still has a “significant” presence in the UK, it noted.
“Against this backdrop, our current focus remains on monetising the completed stocks for cash generation,” Eco World International said. “Our group targets to sell all these stocks in FY2024, and distribute excess cash generated to our shareholders” after setting aside funds for capital, it said.
Towards the end of Oct 2022, the company had put all new launches on hold to reassess their feasibility amid rising development costs and weakening purchasing power. Home prices in London fell 4% while construction costs in the UK rose 5% in FY2023.
To weather the tough times, the company prioritized cash generation and preservation and returned excess cash to shareholders, distributing RM936 million in dividends for FY2023.
The management is “closely monitoring and reassessing the feasibility of the unlaunched phases of our existing projects,” Eco World International said. There is a “shortage of good-quality homes” in London which remains a source of opportunities in the longer term when the market recovers, it said.
“The board will only consider proceeding with launches when market conditions improve, cost pressures stabilise and expected returns that meet the group’s requirements can be forecast with greater certainty.”
Eco World International reported a net loss of RM37.69 million for the three months ended Oct 31, 2023, narrowing 12-month net loss to RM85.37 million from RM234.42 million a year earlier. The company is expected to announce its latest quarterly results by March.
Shares of Eco World International were unchanged at RM0.325 at 12pm, valuing the developer at RM780 million.