KUALA LUMPUR: Ekovest Bhd’s earnings forecasts for the next two years have been substantially cut by AmInvestment Bank Bhd after the company failed to take over Iskandar Waterfront City Bhd.
On Bursa Malaysia, Ekovest’s shares were down 4.5 per cent or five sen to RM1.07 at the close of the first session today.
AmInvest cut its financial years 2019 and 2020 earnings forecasts for Ekovest by 26 per cent and 21 per cent respectively following the failed bid.
On Thursday, Ekovest’s shareholders shot down its proposed takeover of IWCity at an extraordinary general meeting, with 69 per cent of the total votes going against the proposal.
Ekovest had in October last year proposed to buy a 62 per cent stake in IWCity – held by shareholders other than common controlling shareholder Tan Sri Lim Kang Hoo via Iskandar Waterfront Holdings – for RM1.50 cash per IWCity share or one new Ekovest share per IWCity share.
“Our previous forecasts consolidated earnings contribution from IWCity as we assumed Ekovest to successfully acquire 62 per cent of IWCity, turning it into a subsidiary. We now exclude the earnings from IWCity,” AmInvest said.
AmInvest, however, said Ekovest's fundamentals remain solid without IWCity.
“We like Ekovest for its strong construction earnings visibility underpinned by a sizeable outstanding construction order book of RM13 billion which will keep the company busy for the next three to five years, its sturdy recurring income from toll concessions lasting till August 2069 and it is poised to capitalise on the next property upcycle with its landbank in the vicinity of the River of Life with an estimated gross development value of RM6 billion,” it said.
AmInvest maintained its “buy” call on Ekovest with higher target price of RM1.70 from RM1.35 previously.