News by MIDF Research

Assuming the same placement price of RM1.30 for all tranches, EcoWorld is expected to raise up to RM768.4 million. Out of this, RM468 million (61% of gross proceeds) is targeted for the subscription of EcoWorld International Bhd’s (EWI) initial public offering (IPO). This is followed by RM297.7 million (or 39%) for future land acquisitions.

We are expecting its order book to expand to RM1 billion and an improvement of 1.5 percentage points (ppts) of net margin from 13% to 14.5% for financial year ended Dec 31, 2016 (FY16) with its three-year strategic plan.

Evidently, IBS has proven to reduce costs and positively impact the bottom line of construction giants such as Skanska, Hochtief and Bechtel.

The top three projects are Malaysian Anti-Corruption Commission buildings at Precint 7, Putrajaya, two building blocks of MK22 condominiums, Mont’Kiara and PJ Midtown building and external works.

The lower-than-expected earnings were attributed to lower margins, impacted by a higher interest cost, which rose 63.7% year-on-year to RM15.09 million in 9MFY16.

WCT’s financial headroom was reduced further when the property market softened in early FY15 and cash proceeds from property sales fell short of expectations.

Mah Sing’s balance sheet is very strong with a net gearing of only 0.05 times, and we expect it to stay below 0.15 times up to end-FY16.

Out of the total land bank, 6,275 acres (or 84%) are still undeveloped with remaining GDV of RM74.96 billion (or 92% of total GDV).

The sales target of RM1.4 billion is 40% higher than its expected sales of RM1 billion for FY15.

Despite estimated lower revenue, Gamuda’s local intra-urban tollways — Lingkaran Trans Kota Holdings Bhd (Litrak), Stormwater Management and Road Tunnel or better known as Smart Tunnel, Shah Alam Expressway (Kesas) and Lebuhraya Damansara-Puchong (LDP) —  have recorded a contribution of about 16.6% of revenue.