Results

• Within expectation. 9MFY16 core PATAMI increased 10% YoY (excluding RM5m of ESOS expenses), accounting for 74% of ours and consensus estimates, respectively.

Dividends

• Declared interim 2 sen per share.

Highlights

• 3QFY16 revenue grew 42% YoY mainly due to progress of revenue recognition from existing projects (Lakeside Residences, Saujana Rawang, Glomac Centro and Reflection Residences) and maiden contribution from Saujana KLIA. Take up rates for ongoing projects are encouraging at above 90%.

• With the minimal launches in 1HFY16, new sales in 3QFY16 only achieved RM51m (vs. RM50m in 2QFY16), bringing 9MFY16 sales to RM131m versus RM500m sales target for FY16 (flat YoY).

• We understand that the company has reduced 2H launches by circa 20% to GDV of RM627m mainly due to deferment in launches of Phase 7, Lakeside Residences (GDV:RM66m) and Sri Saujana project in Johor (GDV:RM22m) as well as reduced launches of Saujana KLIA. Sales of Lakeside Residences have slowed as take up rate for Phase 6 only increased marginally from 60% to 64% QoQ.

• Key launches in 2H15 included Saujana KLIA (GDV: RM217m) and Centro V (GDV: RM263m). Both projects account for 77% of total 2H16 launching. Glomac had launched Phase 2C (78 units 2 storey terrace) in Saujana KLIA back in Dec 15 with latest take up rate of 93% as of Feb16. We believe Saujana KLIA will continue to receive favourable response from buyers given its affordable price range of RM500-550k/unit. However, we are cautious on the launching of Cent ro V given its price range of ~RM800 psf in the current soft market. We do not rule out the possibility of delay in the launch of Centro V which could potentially cause new sales to fall short of full year target of RM500m.

• Unbilled sales decreased slightly from RM676m to RM593m QoQ, representing 1.3x of the group’s FY15 property development segment revenue.

Risks

• Slowdown in sales
• Weaker margins.

Forecasts

• Unchanged.

Rating

HOLD

• Posi tives: Strong land-banking, branding and execution track record.

Negatives

• : Lack of liquidity / free float

Valuation

Maintain HOLD with unchanged TP of RM0.89 based on unchanged 50% discount to RNAV with dividend yield of 5%.

Source: Hong Leong Investment Bank Research - 24 Mar 2016