GuocoLand-Eco World deal removes IPO uncertainty due to Brexit: MIDF

PETALING JAYA: The emergence of Singapore-listed GuocoLand Ltd as a strategic investor in Eco World International Bhd’s (EWI) upcoming initial public offering (IPO) has removed the IPO uncertainty due to the Brexit, said MIDF Research.
Last Thursday, EWI announced that GuocoLand will subscribe for a 27% stake in EWI.
Kenanga Research believes EWI is poised to benefit from the synergies and strengths from GuocoLand and Eco World.
GuocoLand is part of the Hong Leong Group. It has presence in Singapore, China, Hong Kong, Vietnam.
MIDF Research said, in the long run, Eco World’s sales will benefit from EWI’s IPO as it will be able to book in the 27% share of sales and profit from EWI’s international business.
MIDF Research is maintaining a “buy” call on Eco World with a target price of RM1.68.
Kenanga Research, which is also reiterating its “outperform” call on Eco World with a target price of RM1.58, said it is positive on the progress of EWI listing given that EWI has already commenced sale and operations of its overseas property developments.
“We continue to like Eco World for its excellent sales achievement, superior earnings growth prospects and strong branding. A key catalyst will be the successful achievement of sales target and earnings delivery,” it said.