Results

1Q14 core PATAMI rose 14.9% yoy to RM24.1m, making up 27% and 25% of HLIB and consensus estimates respectively.

Deviations

None.

Dividends

None.

Highlights

Seasonally slow 1Q. PATAMI declined 23% qoq as 1Q is typically a slow quarter for Glomac. However, PATAMI rose 15% yoy thanks to earnings contribution from ongoing development in Glomac Rawang, Cyberjaya 2 and Lakeside Residences.

Sales slowed down yoy. 1QFY14 sales slowed down 36% yoy, due to Reflection Residences @ Mutiara Damansara being almost fully taken up in FY13.

Landed sales. Collectively, its landed projects comprised more than 60% of 1QFY14 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… Lakeside @ Puchong, was the largest sales contributor in FY13, with RM229m worth of properties launched in FY13 (Phases 2 to 4) and collectively achieved more than 90% taken up. We expect more of the same in FY14, with RM239m worth of new launches lined up, comprising of three phases of residential launches (Phases 5 to 7). Phase 5 is slated for Nov / Dec launch, with the residential units priced from RM820k/unit upwards.

High-rise projects doing well. Glomac Centro (revised GDV: RM359m) is now more than 70% taken up, vs. 67% last quarter. Meanwhile, the overall takeup rate for Glomac Damansara Residences is 95% to-date.

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

Maintained.

Rating

HOLD

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%) and our HOLD recommendation on the stock.

Source: Hong Leong Investment Bank Research - 24 Sep 2013