Credit Update 3Q2FY6 Eco World: Strong Sales and Balance Sheet Support Credit Profile

Following our previous 2Q26 Credit Update, Eco World Development Group Bhd (Eco World) has released its 3QFY26 results, providing further insights into its financial and credit performance. This update reviews the key developments since our previous assessment.

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• Company Overview: Eco World is a listed property developer specialising in integrated township and industrial developments, primarily targeting the middle- to upper-income market segments.

• Sizeable Landbank Supports Long-Term Growth: Eco World maintains a sizeable undeveloped landbank of 4,919.7 acres across key regions, providing a strong foundation for future township and industrial developments (Table 1).

Table 1: Sizeable landbank supportive of growth prospects

• Strong Sales and Earnings Visibility: Eco World had RM5.01 billion in unbilled sales as of 31 August 2026, providing good near-term earnings and cash flow visibility. Meanwhile, 10-month sales reached RM4.05 billion, already exceeding the full-year FY2026 sales target of RM4.0 billion ahead of schedule (Table 2).

Table 2: A breakdown of the YTD sales achieved by revenue pillars

• Data Centre Mega-Deal: On 22 September 2026, EBP VII secured a conditional RM1.01 billion land sale to TERA Data Centers, lifting FY2026 sales above RM5.0 billion and supporting near-term liquidity. Following the transaction, cumulative industrial land sales to regional and global hyperscale operators across QUANTUM Edge, Eco Business Park I, and Eco Business Park V exceeded RM2.9 billion (Table 3).

Table 3: Six sizeable industrial land sales in 2 years, anchored by global hyperscalers

• Resilient Financial Performance: Revenue increased 27.5% YoY, driven by key projects across the Southern and Central regions. Core operating profit rose 15.4% YoY to RM204.6 million, while operating profit margin eased to 21% from 23%, mainly due to higher cost savings realised in the corresponding quarter last year (Table 4).

Table 4: Eco World Profitability Indicators

• Robust Credit Profile: Debt declined, with net gearing improving to 19% and net debt-to-total property assets at a low 14%. Liquidity also remained strong, supported by an interest coverage ratio of 6.5 times and cash-to-short-term debt ratio of 10 times, indicating a healthy ability to meet interest obligations through operating earnings (Table 5).

Table 5: Eco World Key Credit Metrics

• Robust Liquidity Amid Relatively Higher Leverage: Eco World is compared with SP Setia and UEM Sunrise, given their similar business profiles as major Malaysian property developers. Eco World has higher net gearing (47%) and net debt-to-total property assets (32%), indicating relatively higher leverage. However, it outperformed both peers in interest coverage (5.7 times versus 3.8 times and 2.1 times) and cash-to-short-term debt (4.6 times versus 1.5 times and 1.3 times), providing comfort on its debt servicing capacity. This is supported by robust property sales and gains from industrial land disposals. (Table 6)

Table 6: Peer Comparison

• Recommendation: Eco World maintains a strong credit profile, supported by solid sales visibility, resilient earnings and a strengthened balance sheet, we remain positive on Eco World’s outstanding bonds and recommend bondholders to hold (Table 7). However, given the Eco World bond's limited liquidity and lower yield at this juncture, we would conversely recommend Tenaga Nasional Berhad's new issuance, an unsecured bond rated AAA by RAM, offering an attractive yield of 4.4%.

Table 7: Eco World Bonds