KUALA LUMPUR: Eco World International Bhd's strategy to monetise its completed stocks remains on track, according to its president and chief executive officer, Datuk Teow Leong Seng.
As of October 31, the group's unsold completed stock was valued at about RM290 million, with its effective share at RM210 million. Around half of this value comprises commercial units in the United Kingdom (UK).
Teow noted that construction costs in the UK have been relatively stable recently, but weak buyer demand persists, particularly among second-home buyers.
This is attributed to higher stamp duty rates introduced in the UK government's latest budget announcement.
"Persistently high mortgage rates also continue to discourage many potential investors from committing to purchases," Teow said.
Considering the reduced demand from investors, who have tended to make up a significant segment of the group's buyers, Teow said the group plans to evaluate the feasibility of its remaining development sites and will proceed with new launches only when market conditions are more conducive and expected returns can be projected with greater confidence.
Moving into the fiscal year 2024 (FY2025), the company intends to evaluate the feasibility of its remaining development sites while it focuses on selling all the rest of its inventory.
"We aim to sell all these units in FY2025. While high interest rates are dampening the prices of investment assets overall, we have commenced marketing selected tenanted commercial units. The interest has been encouraging, driven by their prime locations and the strong business performance of their tenants. Simultaneously, we are actively seeking high-quality tenants for vacant units to maximise their sales value," he said in a statement.
Eco World International reduced its net loss for the fourth quarter ended Oct 31, 2024 (4QFY2024), to RM12.21 million from RM37.69 million in the same quarter the previous year.
Revenue for the quarter fell to RM1.33 million from RM28.55 million due to the near sellout of projects in Australia.
The improved performance was driven by reduced losses from its UK joint venture, lower administrative expenses from ongoing cost optimisation measures, and lower marketing expenses.
The company noted that its joint venture with Eco World-Ballymore benefitted from reduced inventory holding costs as inventories were sold down.
Additionally, Eco World International discontinued recognising further losses from its investment in Eco World London after a full write-down in 1QFY2024, in contrast to loss recognition during 4QFY2023.
For the full FY2024, Eco World International recorded a net loss of RM34.35 million, a significant improvement from RM85.37 million in FY2023. Revenue fell to RM33.15 million from RM104.8 million, reflecting the near completion of its Australian projects, West Village and Yarra One.
Teow said that the group's cash balance of RM334.66 million as of October 31, along with the value of unsold completed stocks, positions the company well to achieve its goal of generating excess cash of up to RM500 million for distribution to shareholders.
The first tranche, amounting to RM144 million, was paid in July 2024.
The second tranche, totalling RM120 million, based on a final five-sen dividend, is scheduled for payment on Jan 14, 2025.