EcoWorld set for RM167mil profit boost from data centre land sale: CGS International
KUALA LUMPUR: Eco World Development Group Bhd's (EcoWorld) RM1.013 billion land sale to Tera Data Centers (Malaysia) Sdn Bhd is expected to provide a positive boost to its sales and earnings, said CGS International Research.
EcoWorld Development Group is projected to see a RM167 million profit increase from selling land in Negeri Sembilan to data centre company Tera Data Centers, according to CGS International Research. The joint venture, Eco Business Park 7, recently entered into a conditional sale and purchase agreement for two parcels of industrial land.
CGS International believes this land sale will signal a rise in data centre interest in Malaysia, potentially leading to multi-year sales and earnings growth for EcoWorld and similar industrial park developers. Assuming a pre-tax margin of 20 to 30 percent, the profit boost is estimated between RM110 million and RM167 million, which would be 13 to 19 percent of their financial year 2027 profit forecast.
This earnings contribution is expected to be recognized progressively over FY27 and FY28. CGS International also notes that the RM105 per square foot land price appears reasonable for EcoWorld's Eco Business Park 7, given its development stage compared to similar transactions in Klang Valley locations. The land sale and total sales from Eco Business Park 7 now exceed RM800 million and RM1.8 billion respectively, solidifying its reputation as an attractive destination for both SMEs and global hyperscale players.
CGS International keeps their forecasts unchanged, pending further clarity on the land sale, and maintains an unchanged target price of RM2.63.
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