KUALA LUMPUR (Dec 11): Property developer Eco World International Bhd (KL:EWINT) has declared a final dividend of five sen per share for its FY2024 to be paid in January next year, as it managed to reduce its losses for the fourth quarter ended Oct 31 (4QFY2024) to a third of what it incurred in the previous year's corresponding quarter.

The group's net loss fell to RM12.21 million in 4QFY2024, from RM37.69 million in 4QFY2023, despite revenue dropping to RM1.33 million from RM28.55 million, as it recorded lower losses from its joint venture in the UK, lower administrative expenses due to ongoing cost optimisation initiatives, and lower marketing expenses as its projects in Australia are almost fully sold out.

The lower revenue was because it had sold all the residential units in both its projects in Australia, namely West Village and Yarra One, with only one commercial unit remaining, it said in a bourse filing on Wednesday.

"The lower losses in [the joint venture] Eco World-Ballymore resulted from lower inventory holding costs as it sold down its inventories. Furthermore, the group had discontinued recognition of share of further losses in Eco World London since 1QFY2024 subsequent to full write-down of its investment in the joint venture, as opposed to share of losses recognised during 4QFY2023," the group said.

For the full FY2024, Eco World International recorded a net loss of RM34.35 million, down from RM85.37 million in FY2023, while revenue fell to RM33.15 million from RM104.8 million.

Moving into FY2025, the group said it will evaluate the feasibility of its remaining development sites, while it focuses on selling all the rest of its inventory.

As of Oct 31, the value of the group's unsold completed stock stood at about RM290 million, with its effective share standing at RM210 million. And about half, by value, comprises commercial units in the UK.

"Construction costs in the UK have remained relatively stable in recent months. However, the key concern related to weak buyer demand remains, particularly among second-home buyers who are now subject to higher stamp duty rates following the UK government’s latest budget announcement. Persistently high mortgage rates also continue to discourage many potential investors from committing to purchases," said Eco World International president and chief executive officer Datuk Teow Leong Seng in a statement.  

Considering the reduced demand from investors, who have tended to make up a significant segment of the group's buyers, Teow said the group plans to evaluate the feasibility of its remaining development sites and will proceed with new launches "only when market conditions are more conducive and expected returns can be projected with greater confidence".

Meanwhile, the group has started marketing selected tenanted commercial units, as high interest rates are dampening the prices of investment assets overall.

“The interest has been encouraging, driven by their prime locations and the strong business performance of their tenants. Simultaneously, we are actively seeking high quality tenants for vacant units to maximise their sales value,” Teow added.  

And given the group's current cash balances — which stood at RM334.66 million as of Oct 31 — and the value of its unsold completed stocks, the group is progressing towards its target of generating excess cash of up to RM500 million for distributions to shareholders, said Teow.
 
The first tranche of this — amounting to RM144 million had been paid in July 2024, he noted. The second tranche, RM120 million based on the final five sen dividend as announced, will be paid on Jan 14, 2025.

Shares of Eco World International closed half a sen or 1.61% higher at 31.5 sen on Wednesday, giving the company a market capitalisation of RM744.19 million.