Results

2Q14 core PAT rose 63.9% yoy to RM39.2m, with YTD net profit of RM63.3m making up 40% and 49% of HLIB and consensus estimates respectively.

Deviations

We were overly aggressive with earnings forecasts from its key projects and we have toned down the earnings forecasts accordingly.

Dividends

None.

Highlights

Strong 2Q. 2Q PATAMI was up 64% yoy thanks to the following earnings contributors: (1) Ongoing township projects in Bandar Saujana Utama and Saujana Rawang; (2) New projects Lakeside Residences, Glomac Cyberjaya 2, Glomac Centro and Reflection Residences; (3) Glomac Damansara Residences which is nearing completion; and (4) RM16m gain from disposal of investment in Melbourne, Australia at associate level. Modest sales in 2Q. 2Q sales was down 25% yoy and 4% qoq as there were no significant new launches in 1H FY14, as management made the deliberate decision to pace its launches ahead of Budget 2014 and instead focus on sales at ongoing projects.

Turning cautious, post-Budget. Following the punitive cooling measures tabled under Budget 2014, we note that GLMC is turning cautions, and has toned down its overall FY14 launches from RM1.39bn to RM1.01bn. The key changes were Lakeside Residences (from RM239m to RM121m) and Glomac Centro (previously targeted to launch RM255m in FY14 but is now postponed indefinitely).

Healthy earnings visibility. Unbilled sales now stand at RM858m (1.3x FY13 revenue).

Risks

Slowdown in sales; hike in stamp duty/RPGT.

Forecasts

FY14-15E net profit forecasts reduced by 6-16% to make for more realistic earnings projections.

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 - 4 Dec 2013