Eco World Kulai land sale strengthens data centre push, says RHB Research

KUALA LUMPUR: Eco World Development Group Bhd's latest disposal of its final data centre-designated land parcel in Kulai at a record-high price is expected to strengthen its financial capacity for future growth, said RHB Research.

Last Friday, Eco World entered into a conditional sale-and-purchase agreement to sell 20.07 hectares of land at Quantum Edge (QE) industrial park in Kulai to a regional hyperscale data centre specialist, KNBDC Malaysia Five, for RM280.8 million.

The firm noted that this is the last large tract of land for a data centre in QE, and the remaining parcels are allocated for commercial and service industry units (standard products).

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"The transaction price of RM130 per square foot (psf) is also at a record high, compared to the previous sales – which were made to Microsoft (at RM75 psf, in Jun 2024) and Princeton Digital (at RM90 psf, in Aug 2024)," it said.

According to RHB Research, this latest sale should amply enrich its war chest for future land banking and funding for the ongoing core-and-shell construction of the DC.

In total, Eco World has booked RM907 million worth of land sales to three data centre players within two years, compared to its land cost of only RM211 million for the 163.49-hectare piece of land at QE.


"This, again, indicates Eco World's strong execution ability to attract world-renowned data centre players to its industrial park.

"The sale to KNBDC is expected to be completed by the first half of 2027 (1HFY27), and the cash proceeds should come in handy for future landbanking and the ongoing core-and-shell construction of the data centre at Eco Business Park (EBP) V," it said.

RHB Research maintained a "Buy" call on the stock with a lower target price (TP) of RM2.78 from RM3.06.

"Despite the strong earnings visibility and Eco World's solid track record, we trim our TP to reflect the current market headwinds arising from geopolitical factors related to the Middle East," it added.