KUALA LUMPUR (Nov 28): Eastern & Oriental Bhd (KL:E&O) blamed Friday’s sharp decline in its stock price on its recent exclusion from the Securities Commission Malaysia’s (SC) list of shariah-compliant securities.
The property developer is working to restore its shariah status by close of its financial year in March 31, 2026, said managing director Kok Tuck Cheong. Efforts are underway, including raising the proportion of Islamic financing in its total debts, he said.
“However, it may take longer than usual as we are already near year end,” he told reporters at a post-earnings briefing.
Shares of E&O fell as much as 15.5 sen or 20% to 60.5 sen, their lowest since January 2024. The counter closed at 71 sen after more than 71 million shares changed hands. At the last price, the company has a market capitalisation of RM1.8 billion.
A stock deemed non-compliant will usually trigger a selldown by shareholders, especially institutional investors, who adhere to the set of Islamic investment principles. Apart from prohibition on activities considered haram such as gambling or alcohol, a company that takes on excessive interest-based debt will also lose its shariah-compliant status.
The SC updates its list semi-annually, on the last Fridays of May and November. The current updated list was compiled based on reviews of audited financial statements released between April 1 and Sept 30.
E&O currently has an estimated RM1.8 billion in outstanding loans, with total borrowings standing at RM393.9 million, while cash and bank balances amounted to RM288.15 million.
Kok said the company is progressing with the second phase of its Andaman Island development, with reclamation works underway, while continuing to roll out residential products under Phase 1, including the Avea serviced apartments.
Upcoming launches over the next year include Laman Embun and Seri Embun in Elmina, he said, reiterating the company's plan to launch projects worth RM1 billion in gross development value each year.