Glomac’s 1QFY14 net profit of MYR24.1m came in line with estimates. During its briefing, management shared that it is aiming for a 10% rise in new sales, underpinned by the MYR1.38bn in planned launches for FY14. The company has also started shifting its focus away from highrise developments towards the affordable landed housing segment, which is still underserved. Maintain TRADING BUY.

• Within expectations. Glomac recorded MYR24.1m net profit (+14.9% yo-y; -22.6% q-o-q) in 1QFY14, coming in within our and consensusestimates. The earnings growth was mainly attributed to the progressbillings from its ongoing development in Glomac Rawang, Cyberjaya 2 and Lakeside Residences. No dividend was declared, and managementhas indicated that FY14’s dividend payment will be at least equivalent to FY13’s 6.5 sen DPS.
• Targeting a 10% rise in new sales. Glomac is aiming for a growth of10% over FY13’s MYR802m total sales, in line with our full-year FY14 target of MYR850-900m. The new sales will be underpinned by the MYR1.38bn in planned launches for FY14, with the bulk of this slated to be rolled out in 2HFY14. Despite the lack of new launches in 1QFY14, Glomac managed to record decent total sales of MYR136m from its ongoing projects. We believe that the company will be able to achieve itsfull-year sales target once it starts rolling out its new launches. As at end-July, unbilled sales stood at MYR852m.
• More focus on affordable housing. FY14 will see the maiden launch from Glomac’s new township, Saujana KLIA, where about MYR205m worth of products will be rolled out. The focus will be on providing affordable houses (<MYR500,000 per unit), as management believes that this market is still underserved at present. Another affordable landed housing project is Saujana Rawang, where MYR163m worth of properties will be put into the market in FY14.
• Maintain Trading Buy. We make no changes to our forecasts, maintaining our TRADING BUY call and MYR1.36 FV, based on 30.0% discount to RNAV. We believe that Glomac’s rising exposure to the landed property segment, where demand is more sustainable, could help to support growth. The stock also offers a decent net dividend yield of about 5.0%.

Source: RHB