ECOWLD (8206) - Eco World Development Group Bhd - Ex for 1-into-2 share split
Target RM2.94 (Stock Rating: ADD)
Eco World shares went ex for the 1-into-2 share split today, which reduced the share price, target price and EPS by half. While the share split has no impact on the fundamentals of the group, it is welcomed as it lowers the entry price of the stock and could help boost liquidity. The next milestone is the upcoming acquisition of 3,000 acres of landbank from Eco World Sdn Bhd (EWSB) for RM3.8bn. The proposed 1-for-2 rights issue and 20% share placement will take place in the coming months. No changes to our target basis of 20% discount to RNAV and Add recommendation as Eco World remains one of our top picks in the sector. Potential re-rating catalysts include the ongoing restructuring exercise, better-than-expected new sales and continuous landbanking.
What Happened
The share price of Eco World went ex for the 1-into-2 share split, which reduces the par value of the stock to 50 sen and increases the paid-up cap to 506.6m shares. The next milestone will be the issuance of 806.85m new shares at a subscription price of RM1.70 each for the acquisition of 3,000 acres of landbank held by EWSB.
What We Think
We view positively the share split as it will boost liquidity of the relatively thinly-traded stock. The imminent completion of the acquisition of EWSB's landbank will be very positive as it consolidates all the Malaysian landbank of the Eco World group under one umbrella. The upcoming rights issue (targeted to raise RM788m) and 20% private placement will help pare down gearing and strengthen the balance sheet of the group. The rights issue with free warrants is expected to go ex in mid-Mar while the proposed placement is targeted for 2Q15. Upon the full completion of all the exercises, the paid-up cap of the group is expected to increase to 2.36bn shares.
What You Should Do
Investors should continue accumulating Eco World as the group is one of two developers that bucked the softening sales trend in 2014. For Eco World's maiden year, the group chalked up RM3.2bn in new sales, 60% above its target. This is very impressive considering that the sales came largely from only six projects - two in the Klang Valley (Eco Sky and Eco Majestic) and four in Johor (Eco Botanic, Eco Tropics, Eco Spring and Eco Business Park 1). Eco World is targeting to achieve RM7bn new sales over the next two years.
Source: CIMB Daybreak - 21 January 2015
Target RM2.94 (Stock Rating: ADD)
Eco World shares went ex for the 1-into-2 share split today, which reduced the share price, target price and EPS by half. While the share split has no impact on the fundamentals of the group, it is welcomed as it lowers the entry price of the stock and could help boost liquidity. The next milestone is the upcoming acquisition of 3,000 acres of landbank from Eco World Sdn Bhd (EWSB) for RM3.8bn. The proposed 1-for-2 rights issue and 20% share placement will take place in the coming months. No changes to our target basis of 20% discount to RNAV and Add recommendation as Eco World remains one of our top picks in the sector. Potential re-rating catalysts include the ongoing restructuring exercise, better-than-expected new sales and continuous landbanking.
What Happened
The share price of Eco World went ex for the 1-into-2 share split, which reduces the par value of the stock to 50 sen and increases the paid-up cap to 506.6m shares. The next milestone will be the issuance of 806.85m new shares at a subscription price of RM1.70 each for the acquisition of 3,000 acres of landbank held by EWSB.
What We Think
We view positively the share split as it will boost liquidity of the relatively thinly-traded stock. The imminent completion of the acquisition of EWSB's landbank will be very positive as it consolidates all the Malaysian landbank of the Eco World group under one umbrella. The upcoming rights issue (targeted to raise RM788m) and 20% private placement will help pare down gearing and strengthen the balance sheet of the group. The rights issue with free warrants is expected to go ex in mid-Mar while the proposed placement is targeted for 2Q15. Upon the full completion of all the exercises, the paid-up cap of the group is expected to increase to 2.36bn shares.
What You Should Do
Investors should continue accumulating Eco World as the group is one of two developers that bucked the softening sales trend in 2014. For Eco World's maiden year, the group chalked up RM3.2bn in new sales, 60% above its target. This is very impressive considering that the sales came largely from only six projects - two in the Klang Valley (Eco Sky and Eco Majestic) and four in Johor (Eco Botanic, Eco Tropics, Eco Spring and Eco Business Park 1). Eco World is targeting to achieve RM7bn new sales over the next two years.
Source: CIMB Daybreak - 21 January 2015
