KUALA LUMPUR (Sept 25): Eco World Development Group Bhd (EcoWorld), which posted a net profit of RM13.8 million in the third financial quarter ended July 31, 2020 (3QFY20), has secured total sales of RM1.25 billion in the four months after Movement Control Order (MCO).
"The bulk of these sales are backed by end-financing loans secured by our purchasers. This is testament not just to the good credit standing of our customers but also the immense support of the banking community for our projects which we are very grateful for," said its president and chief executive officer Datuk Chang Khim Wah.
He noted that the reintroduction of the Home Ownership Campaign in June 2020 also contributed to an uptick in buying interest.
"The resurgence of interest we have been experiencing will be given a further boost through the group's latest campaign #YouBelong which actively engages all our target markets to convey the message that they belong in an EcoWorld community. Accompanied by attractive promotional packages, it is designed to drive sales and accelerate cash conversion of stocks to further strengthen our balance sheet," said Chang.
The property developer's net profit came lower at RM13.8 million compared with RM50.48 million a year ago, due mainly to the group's decision to write down inventories by RM65 million. As a result, gross profit for the quarter under review was lower at 11.4%.
Excluding the write-down on inventories, the group's earnings would have been higher year-on-year, while gross profit would have been 25.1% compared with 21.5% in 3QFY19.
It is worth noting that the group's gearing ratios have improved. EcoWorld's gross gearing dropped to 0.74 times as at July 31 from 0.83 times as at end-October last year. Its net gearing fell to 0.64 times from 0.7 times for the same period.
Quarterly revenue dropped 8.34% to RM477.87 million from RM521.37 million.
On a quarter-on-quarter basis, the group's revenue was 38.35% higher against RM345.4 million in the preceding quarter, while net profit fell 35.47% from RM21.39 million in 2QFY20 due to the write-down on inventories, according to a filing with Bursa Malaysia.
For the cumulative nine months ended July 31, 2020, its net profit dropped to RM68.71 million from RM121.97 million a year ago, while revenue sank 12.5% to RM1.36 billion from RM1.56 billion.
The group said the MCO followed by the Conditional Movement Control Order imposed continued to impact the group's operations in 3QFY20.
On prospects for FY20, the group expects its earnings outlook will be "substantially lower" compared with FY19.
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