Glomac Bhd ("Glomac") reported better-than-expected earnings due to more favourable product mix. Despite slow start in new property sales, management targets to launch RM385 mil in 2HFY25 to exceed FY24 new sales of RM360 mil. We maintain our HOLD recommendation on the stock with higher target price of RM0.44 from RM0.40 previously, based on 45% discount to RNAV and unchanged neutral ESG rating of 3 stars.

• Above our expectation but within consensus. Glomac reported 1HFY25 core net profit of RM11.3 mil, which came in above our expectation but within consensus' expectation at 68.2% and 53.2% of respective full year estimates. The positive deviation was due to better-than-expected margins. We raised our earnings forecast for FY25F/FY26F/FY27F by 37.0%/ 33.7%/30.9% after adjusting upward gross margin assumption. The Company also announced 1 sen dividend per share.
• Better earnings YoY driven by favourable product mix. In 1HFY25, Glomac's core net profit grew by 11.9% YoY, underpinned by progress billings from ongoing developments at Saujana Perdana, Plaza @ Kelana Jaya and 121 Residences. 1HFY25 core net profit more than doubled to RM11.3 mil, mainly driven by higher revenue and better margins due to favourable product mix.
• More aggressive property launches in the 2HFY25. Glomac only recorded new sales of RM88 mil in 1HFY25 due to slow property launch amounting to RM71 mil. Management guided that new sales would exceed FY24A level of RM360 mil with more aggressive planned launches of RM385 mil (GDV - Saujana KLIA : RM65 mil; Saujana Jaya, Kulai : RM32 mil; Lakeside Residences : RM192 mil; Saujana Perdana : RM96 mil) in 2HFY25.

Source: AmInvest Research - 28 Nov 2024