EcoWorld records RM46.4m profit after tax in 3Q2022, buoyed by improved gross profit margins, increased contributions from local JVs

• The balance sheet continued to strengthen as at July 31, 2022 with reduction of gross and net gearing levels to 0.55 times and 0.35 times.
• Group’s near-term earnings visibility has also improved with Future Revenue increasing to RM4.2 billion as at Aug 31, 2022.

KUALA LUMPUR (Sept 15): Eco World Development Group Bhd (EcoWorld Malaysia) recorded RM46.4 million profit after tax (PAT) in 3Q2022, which is 32% higher than 3Q2021.

The developer stated in a media release on its results for 3Q 2022 today that this is due to strong PAT growth of 96% by the group’s Malaysian operations. This brings the cumulative 3Q YTD (nine months) 2022 PAT to RM155.4 million.

According to EcoWorld Malaysia, the “substantially higher PAT in 3Q2022 from Malaysian operations was due to improvement in gross profit margins and increased contributions from local JVs, cost savings achieved on selling and administrative expenses, and reduced finance costs as borrowings were steadily pared down”.

Meanwhile, revenue of RM444 million in 3Q2022 was 1.1% lower than 3Q2021 but gross profit of RM104.3 million was 22.1% higher. “This is due to the improvement in gross profit margin to 23.5% in 3Q2022 versus 19% in 3Q2021,” stated EcoWorld Malaysia.

The group also saw a share of loss of RM12 million in Eco World International Bhd in 3Q2022. This was due to lower profit contribution from Australian projects after substantial handovers in FY2021 and revision of profit margins on JV projects in the UK in 3Q2022.

The balance sheet continued to strengthen as at July 31, 2022 with reduction of gross and net gearing levels to 0.55 times and 0.35 times, respectively; reduction in bank borrowings to RM2.6 billion compared to RM2.9 billion at the start of FY2022; and increase in cash and bank balances to RMM954.3 million compared to RM784.7 million at the start of FY2022.

“The group’s near-term earnings visibility has also improved with Future Revenue increasing to RM4.2 billion as at Aug 31, 2022,” said EcoWorld Malaysia.

"The group had a great three months from June to August 2022 which saw sales increasing by RM1.27 billion. As a result, we managed to reach 98% of our full year sales target in just 10 months of FY2022,” said Datuk Chang Khim Wah, president & CEO of EcoWorld Malaysia.

“Every region and market segment performed well. Projects in the Klang Valley recorded RM660 million, Iskandar Malaysia contributed RM445 million and Penang achieved RM165 million in sales during the 3-month period,” he added.

“Based on what has been achieved to date, we have been able to declare a 1st and 2nd interim dividend totalling 3 sen per share to our shareholders.

“We still have another two months of our financial year to go and are positioned to close FY2022 strongly as we continue to pursue our objective of enhancing value for all our stakeholders,” Chang said.

“Our remaining undeveloped landbank of 3,731 acres also remains sizeable. However, in the event a good opportunity arises in the near to mid-term, we are well positioned to take advantage of it to enhance our future growth prospects, given our current low gearing levels,” he added.

Chang said EcoWorld Malaysia’s focus this year is to serve the needs of the upgrader market, with the launch of more aspirational homes continuing “to bear fruit”.

“The sustained demand for higher-end homes at all our projects indicate the increasing maturity of our various townships with comprehensive amenities to meet the lifestyle aspirations of more affluent homeowners.

“We have been experiencing this throughout FY2022 and in Iskandar Malaysia, the demand for upgrader homes received a big boost when the borders re-opened in April, with the momentum still continuing today,” Chang explained.

“At the same time, we have not forgotten the large following we have built-up in the new homeowner market over the past few years. Accordingly, we launched several products in 3Q 2022 to meet the needs of this important market segment,” he added.