• E&O’s 1QFY27 CNP came in at RM58.1m (+27.9% YoY, -23.8% QoQ), accounting for 21% of our FY27F forecast and 22% of consensus estimates, which is in line with our expectations.
• The Group’s outlook remains positive, supported by its strong unbilled sales, which is expected to provide revenue visibility through FY29 as construction advances.
• We maintain our FY27F/FY28F core net profit forecasts of RM272.5m/315.4m, while introducing FY29F core net profit of RM513.7m.
• Maintain BUY with an unchanged TP of RM0.96, based on a 55% discount to our RNAV.
Results Inline. E&O’s 1QFY27 core net profit (CNP) came in at RM58.1m (+27.9% YoY; -23.8% QoQ) after adjusting for a bad debt written off (RM0.02m) and a gain on disposal of plant, property and equipment (RM0.01m). These results are broadly in line with expectations, accounting for 21% of our FY27F forecast and 22% of consensus estimates. The earning was primarily driven by the Property segment, whose operating profit (OP) surged +44.7% YoY and +14.6% QoQ. This outperformance was supported by stronger revenue recognition from ongoing projects, alongside maiden contributions from newly launched developments.
QoQ. Revenue rose +19.3% QoQ to RM281.5m (4QFY26: RM235.9m),) mainly due to a +14.6% increase in the Property segment’s OP, driven by higher revenue recognition from ongoing projects (The Meg, Arica, The Lume, Maris) and maiden revenue recognition from Seri Embun. Nevertheless, excluding the bad debt written off (RM0.02m) and gain on disposal of plant, property and equipment (RM0.01m), CNP declined by 23.8% QoQ to RM 58.1m (4QFY26: RM 76.3m), largely due to a tax-rate effect rather than an operating one. This is due to a combination of non-taxable income, recognition of deferred tax assets, and a lower Real Property Gains Tax (RPGT) rate applied to a disposal gain.
YoY. CNP surged +27.9% YoY, underpinned by robust revenue recognition and healthy sales across existing projects. The momentum was largely driven by the Property segment’s OP, which increased 44.7% to RM83.0m (1QFY26: RM57.4m). However, segment OP margin actually narrowed to 32.4% from 36.6% a year earlier, as 1QFY27's growth leaned more on ongoing and newly-recognised, which typically carry thinner margins in their initial billing stages than 1QFY26's more mature project mix.
Outlook. The Group's outlook remains positive, supported by stronger contributions from its Property segment. Earnings visibility is underpinned by steady construction progress and healthy sales momentum; unbilled sales continue to provide revenue visibility through FY29. Looking ahead, the Group plans to launch two additional residential projects in 4QFY27, which should support future growth. In addition, The June 2026 partnership with Cengild Medical Berhad and Skyspring Sdn Bhd to develop a 240-bed multidisciplinary tertiary private hospital on Andaman Island together with the newly secured 1.4-acre freehold land parcel near KLCC and Pavilion KL earmarked for luxury serviced apartments, broadens E&O's earnings base beyond its core residential launches and lends credibility to its longer-term ambition of an integrated living ecosystem for Andaman Island's estimated 25,000 future residents. The Hospitality segment should continue to benefit from sustained regional travel demand, and near-term margins remain reasonably well protected by fixed-price construction contracts, which limit immediate exposure to rising building material costs.
Earnings Revision. We maintain our FY27F/FY28F CNP forecasts of RM272.5m/315.4m, while introducing FY29F CNP of RM513.7m. The step-up reflects the Group's strong unbilled sales base, built from FY26/FY27 launches and two new FY27 launches, reaching peak percentage-ofcompletion revenue recognition around FY29. We will revisit our earnings forecasts following the analyst briefing scheduled for 28 August 2026.
Valuation. We maintain our BUY call with an unchanged TP of RM0.96, based on a 55% discount to our RNAV. We will revisit our RNAV assumptions following the analyst briefing scheduled for 28 August 2026, particularly in light of any updates to the Group's development pipeline and asset valuations.
Risk. Affordability concerns amid premium positioning, SST exposure on construction services, and Syariah-compliant status risk.
Disclaimer
The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.
Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.
Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.
| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.065852 | 4.097386 |
| EUR | 4.589381 | 4.597416 |
| CNY | 0.610175 | 0.610647 |
| HKD | 0.518032 | 0.522054 |
| SGD | 3.177971 | 3.202709 |