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14/09/2017

Total sales under the EcoWorld Brand in 10 months of the FY2017 hits RM3.95 Billion

Kuala Lumpur: Eco World Development Group Berhad (EcoWorld Malaysia) announced today that for the financial year ended 31 October 2017, total EcoWorld Brand sales successfully crossed the RM6 billion mark. In Malaysia, the Group met its FY2017 sales target with RM4 billion sales achieved in FY2017. Meanwhile, Eco World International Berhad (EcoWorld International) saw its total cumulative sales increase by RM2.42 billion from RM5.29 billion as at the end of FY2016 to RM7.71 billion by the close of FY2017.

“This marks the 3rd consecutive year in which combined EcoWorld Brand sales have exceeded the RM6 billion mark. Against the continued challenging market circumstances not just in Malaysia but also the United Kingdom and Australia, it is a tremendous feat achieved by the outstanding teams at both EcoWorld Malaysia and EcoWorld International. Excellence, tenacity and consistency are qualities we strive to inculcate in all our staff – the stellar results achieved is the best reward for the extensive investments we have made to develop their potential,” said Tan Sri Liew Kee Sin, Chairman of EcoWorld Malaysia and Executive Vice Chairman of EcoWorld International.

Commenting on the sales achieved in Malaysia, Dato’ Chang Khim Wah, President & CEO of EcoWorld Malaysia noted that the Group achieved RM1.83 billion sales in its final quarter which is around 46% of its full year target. He attributed the strong result achieved to the resounding success of the EcoWorld Design-Nature-Art (DNA) campaign involving the concurrent launch of 5 of the Group’s projects in the Klang Valley and Penang at the end of September 2017. Collectively these 5 contributed approximately RM1 billion sales to the Group in the final quarter of FY2017 with the balance of around RM800 million contributed by the Group’s other ongoing projects in the Klang Valley, Iskandar Malaysia and Penang.

Outside Malaysia, Dato’ Teow Leong Seng, President & CEO of EcoWorld International commented that sales in the UK have been steady with continuing interest in all three ongoing projects despite Brexit uncertainties. He also highlighted that since the completion of the Group’s Initial Public Offering in April 2017, EcoWorld International has announced three new corporate deals. This will potentially boost the Group’s project pipeline from only 4 projects at listing to 18 projects in total upon completion of all 3 deals thereby significantly improving its earnings visibility going forward.

EcoWorld Malaysia FY2017 performance & FY2018 prospects

The bulk of the EcoWorld Malaysia’s RM4 billion sales is attributable to its 8 projects in the Klang Valley which contributed approximately RM3 billion with the remaining RM1 billion coming from 7 projects in Iskandar Malaysia and 3 projects in Penang.

The EcoWorld DNA campaign, inspired by the Group’s resolve to take its pledge of weaving and embedding the best elements of Design, Nature & Art into every development and bringing it to another level, brought in RM1 billion sales within one month from its launch.

“We are truly gratified by the phenomenal response received from customers towards every development featured under the EcoWorld DNA campaign. This year we launched 5 projects in total – three are maiden launches – namely Eco Horizon in Penang; Eco Forest in Southern Klang Valley and Eco Business Park V in Northern Klang Valley, while the other two are new phases within the Group’s existing townships namely Dremien at Eco Ardence in Shah Alam and Whitten at Eco Majestic City in Semenyih,” said Chang.

All 5 projects offer excellent connectivity to major roads / highways and have easy access to good and improving infrastructure and amenities. In addition, every project has EcoWorld Signature elements such as grand entrance gateways, emblematic fencing, landscaped parks, waterways, gazebos and other unique project markers which exemplify the Group’s commitment to holistically meld elements of art and design into the built environment. Along with aesthetically pleasing facades and the innovative yet practical layout of individual units, these are all key selling points that have become an intrinsic part of the EcoWorld brand promise, thereby enabling the strong sales results to be achieved.

Going forward, the Group’s sizeable and increasingly matured land bank in Malaysia is expected to contribute positively to its future prospects. By FY2018, 10 projects would have transitioned from the investment into the growth phase of the project life cycle with the bulk of primary infrastructure works completed and close to 10,000 units of properties sold handed over. This will enable the Group to put in place new initiatives to further unlock the value of its landbank as the number of physical communities working and living within its developments grow.

“At EcoWorld we aim to not only create outstanding physical environments but also to provide service excellence to our purchasers. Last year we launched several new initiatives to equip every member of Team EcoWorld to be able to deliver the service standards expected of us in the lead up to the handover process,” said Chang.

“This year we have introduced EcoWorld X which represents our commitment to build and grow a strong digital community and link it with our large and growing physical communities for the benefit of all as we move into the 4th Industrial Age. Thanks to our early investment in building up our social media platforms and the large percentage of Gen-Y customers we have been able to attract, we believe this is a very timely and potentially significant move for us. Through EcoWorld X we aim to not only better serve and understand our customers but also discover new opportunities as a natural extension of our property development business,” he continued.

On the earnings front, the Group’s core development earnings are expected to grow in FY2018 once projects undertaken by its joint-ventures in Malaysia and abroad reach a higher stage of completion and attain the criteria for profit recognition respectively.

EcoWorld Malaysia has also set a sales target for RM3.5 billion to be achieved by its Malaysian projects. This takes into account the fact that the Group will not be launching any sizeable new projects next year. Instead the Group will concentrate on further enhancing the value of its existing landbank with the aim of delivering sustainable long-term growth for all stakeholders.

Along with the high level of unbilled sales attributable to the Group as at 31 October 2017 of RM6.4 billion, this should set the Group on a steady growth path and by FY2019, EcoWorld Malaysia is targeting to be in a position to commence payment of dividends to its shareholders.

 

EcoWorld International FY2017 performance & FY2018 prospects

Outside Malaysia, EcoWorld International performed commendably with RM2 billion sales secured in FY2017 – its three projects in London contributed RM1.69 billion while those in Australia generated RM315 million. Its cumulative sales locked in from prior years also grew by RM0.42 billion thanks to a favourable exchange rate movement arising from an appreciation in the GBP in FY2017.

Sales in the UK remain steady with continuing interest in all three ongoing projects despite Brexit uncertainties. Underlying demand for residential units in London remains strong fuelled by the economic strength of the UK and high employment rates.  In addition, supply side constraints coupled with strong local occupier demand bodes well for the prospects of the residential property market. This validates the Group’s strong belief in the long-term growth potential of both the UK housing market as well as the UK economy.

Whilst sales were slower in Australia, management is confident this will pick-up as construction progress. This is due to the location of the new Yarra One project in South Yarra, one of Melbourne’s most popular suburbs and takes into account the preference of locals, who are the target customers for this project, to buy closer to completion. The attractive stamp duty incentives recently introduced by the state government to assist local home buyers, which took effect from 1 July 2017, will also help boost local sales.

On the corporate front, the Group had a busy year in 2017. Apart from successfully completing the Initial Public Offering in April and acquiring an 80% stake in EW-Salcon post-listing through which it is developing the Yarra One project, EcoWorld International recently announced two new deals. These are as follows:

  • A call and put option agreement to buy an existing strata scheme that sits in Macquarie Park, Sydney which it targets to complete by late-2018. Macquarie Park is Sydney’s 2nd largest business district and one of the largest employment, business & technology precincts in the Southern Hemisphere where there is strong local demand for new homes.
  • A proposed joint-venture with Be Living (the development arm of Willmott Dixon, a prominent UK construction and development company), to jointly develop 12 sites in Greater London and the South East of England. This joint-venture is very significant as it potentially enables the Group to expand its presence in the UK to four times its current size. More importantly, the Group will gain its own development management team along with a substantial local market share in the UK (please refer to the separate press release & announcement on the transaction for further detail).

Going forward, the Group is on track to complete construction of two blocks within its London City Island project and one block of Embassy Gardens in FY2018. This will enable earnings to be recognised once the properties sold are handed over to customers.

For FY2018, the Group targets to achieve RM2 billion sales (excluding sales from its new joint venture with Be Living). Upon completion of the acquisition of its 70% equity stake in Be Living’s residential development business and the new project in Macquarie Park, the Group will have 9 projects in the UK (with the possibility of adding on another 6 sites from the Be Living Stage 2 acquisitions) and three projects in Australia. This augurs well for its future growth prospects and the long-term viability of its business model as an international developer with a strong local presence in each of its target markets.