EWI in talks to jointly redevelop Guoco’s assets in London

KUALA LUMPUR (Dec 9): Eco World International Bhd (EWI), which is on track to list on Bursa Malaysia’s Main Market by March next year, is in talks with tycoon Tan Sri Quek Leng Chan’s Guoco Group Ltd to jointly redevelop some assets the latter owns in London.

“There are a few sites (and) we are talking to them to joint venture to redevelop,” EWI president and chief executive officer (CEO) Datuk Teow Leong Seng told The Edge Financial Daily after EWI’s joint press conference with Eco World Development Group Bhd (EcoWorld) yesterday.

“There is a reason [we brought them into EWI]. It’s not only the balance sheet, the financial strength, but also what they bring to the table,” he said. Singapore-listed GuocoLand Ltd is taking up a 27% stake in EWI’s initial public offering (IPO). GuocoLand is 65.2% controlled by Guoco, according to Guoco’s official website.

“It’s a synergy, Guoco is using us as a platform to go into the UK and Australian property markets. They know we have done very well in [the] UK and Australia. It’s a win-win situation,” Teow said.

“The other reason we bring in Guoco is that Guoco actually owns the largest number of hotel rooms in London. They are the biggest hotel operator in London,” Teow noted.

On EWI’s IPO, Teow said the group is confident about the support of investors, including EWI executive chairman Tan Sri Liew Kee Sin, EcoWorld, GuocoLand, the staff, directors and shareholders of EcoWorld.

On the institutional investors’ portion, he said EWI has been working closely with the Employees Provident Fund and Kumpulan Wang Persaraan (Diperbadankan).

“There is actually not much left for the market [to subscribe to], so if you look at that this way, we are quite confident,” he said.

On the local front, EcoWorld president and CEO Datuk Chang Khim Wah said the group is still confident about the property market and will be launching two projects worth RM11 billion starting from the middle of next year.

“Our FY17 (financial year 2017) sales target of RM4 billion for the Malaysian property market will be backed by our existing projects, and [two new yet-to-be-launched projects] Eco Horizon in Penang [with a gross development value (GDV) of RM8 billion] as well as Eco Forest in Semenyih [with a GDV of RM3 billion],” he said.

Chang said the group is not looking to expand its land bank. Instead, it is looking into ways to enhance the value of its existing projects.

EcoWorld announced yesterday that its net profit came in 49% higher year-on-year (y-o-y) at RM29.35 million in the fourth quarter ended Oct 31, 2016 (4QFY16) from RM19.69 million; revenue gained 9% to RM740.98 million from RM681.93 million.

For the full-year (FY16), its net profit surged up nearly three times to RM129.28 million from RM43.95 million a year ago, as revenue climbed 49% to RM2.55 billion from RM1.71 billion.

In a bourse filing, EcoWorld said the improved quarterly performance was due to both strong sales, as well as the steady progress of on-site construction works at 11 of EcoWorld’s ongoing projects.

“The board is pleased to announce that the group has successfully achieved its FY16 sales target of RM4 billion, with sales from Malaysian projects in the final quarter of FY16 exceeding cumulative sales for the first three [quarters] of the financial year,” said EcoWorld.

For FY17 and FY18, EcoWorld aims to achieve its RM4 billion gross sales from all Malaysian development projects managed by the group, including joint ventures. It will also be entitled to a proportionate share of EWI’s sales, based on the group’s proposed 27% shareholding in EWI.

Internationally, EWI’s sales will continue to be anchored by its existing four projects. Post-listing, EWI will also be exploring new project buys to continue to grow its market reach in the UK and Australia.

This article first appeared in The Edge Financial Daily, on Dec 9, 2016. Subscribe to The Edge Financial Daily here.