Results

4Q13 core PATAMI rose 18% yoy to RM31m, while FY13 PATAMI came in at RM102.5m, making up 114% and 108% of HLIB and consensus estimates respectively.

Deviations

Due to stronger than expected margins for its progress billings.

Dividends

2.6 sen net final dividend was declared in 4Q13.

Highlights

A strong finish to the year… Glomac surpassed RM100m in net earnings for the first time, propelled by earnings contribution from Glomac Damansara, Reflection Residences and township developments Bandar Saujana Utama and Saujana Rawang.

A new record in sales… 4Q sales of RM283m helped Glomac achieve record sales of RM802m in FY13, representing a 20% yoy increase.

Landed sales… Collectively, its landed projects comprised more than 60% of FY13 sales, validating our view about the importance of landed segment for Glomac’s new launches. We expect management to continue make the landed segment in the outskirts of Greater KL its priority for FY14.

Puchong flagship… The largest single contributor to sales was its flagship Lakeside @ Puchong, which raked in more than RM200m sales for FY13. We understand that the nearby 2 new LRT stations (Ampang extension line) are targeted for completion in 2014, which no doubt has helped contribute to the project’s popularity with buyers. Glomac has planned RM254m of new launches for FY14, of which RM63m will come from Phase 5 (77 units of 2-storey link homes in end-2013).

Potential en bloc sale… The final phase of Glomac Damansara, i.e. the boutique retail mall has been earmarked for en-bloc sale (GDV: RM375m).

High-rise protection…We believe Glomac’s high-rise projects should be relatively shielded from the potential abolishment of DIBS, with take up rates for Reflection Residences, Glomac Centro and Glomac Damansara Residences standing at 90%, 67% and 94% to-date respectively.

Healthy earnings visibility. Unbilled sales now stand at a record RM888m (1.3x FY13 revenue).

Risks

Slowdown in sales; hike in stamp duty/RPGT.

Forecasts

FY13-14 forecasts raised by 25-27% to factor in lower MI from its projects.

Rating

BUY

Positives: Strong land-banking, branding and execution track record.

Negatives: Lack of liquidity / free float.

Valuation

We maintain our TP at RM1.16 (discount to RNAV remains at 40%) given our belief that Glomac is adequately hedged against a potential ban of DIBS.

Source: Hong Leong Investment Bank Research - 26 Jun 2013