Kuala Lumpur: Eco World International Bhd's (ECWI) share price saw an increase during the morning trading session after the company announced its decision to end a collaboration with Eco World Development Group Bhd (EcoWorld Malaysia). This collaboration was initially established to explore property investment and development opportunities within Malaysia.
According to BERNAMA News Agency, at 10 am, ECWI's share price climbed by four sen, reaching 25.5 sen, with 8.31 million shares being traded. The original agreement, signed in 2016, placed geographical limitations on both entities, restricting ECWI from engaging in property development or investments in Malaysia, while EcoWorld Malaysia was prohibited from undertaking projects outside the nation, except through ECWI.
Maybank Investment Bank Bhd (Maybank IB) expressed optimism regarding ECWI's recent strategic decision, as it enables the company to enter the relatively stable Malaysian property market following the termination of the 2016 agreement. "We are positive on ECWI's latest corporate development, which marks a strategic shift to re-enter a more stable and visible Malaysian property market, compared to its existing exposure in London and Australia, where all planned launches are currently on hold due to market challenges," Maybank IB noted.
The bank further highlighted that this move allows ECWI to capitalize on local opportunities by leveraging its robust balance sheet, paving the way for future collaborations with EcoWorld Malaysia. This development also promises a new income base and a reduction in earnings volatility from overseas endeavors. ECWI intends to generate approximately RM500 million from unsold inventory sales, valued at around RM230 million, and land in London over the next 18-24 months to finance prospective land acquisitions in Malaysia.
With its anticipated local expansion, ECWI may consider revising its dividend commitment between 2025 and 2026, according to Maybank IB. The bank is maintaining its earnings forecast for the company with a target price of 27 sen.