Glomac’s 3QFY14  results  were  broadly  in  line.  As  management  has decided  to  hold  back  some  of  its  launches  for  better  timing,  it  has revised  lower its  FY14  new sales  target  to MYR500m.  Nonetheless,  the company’s long-term  prospects  remain  strong,  underpinned  by  future GDV  of  MYR7.1bn  and  unbilled  sales  of  MYR792m.  Upgrade  to  BUY, with a revised FV of MYR1.38, as most negatives have been priced in.

Within expectations. Glomac’s 3QFY14 results came in broadly in line. Revenue  grew  12.7%  y-o-y,  attributed  to  all  its  key  projects  such  as Lakeside  Residences,  Centro,  and  Reflection  Residences.  Note  that 3QFY14’s  net  margin  was  lower  than  those  in  the  previous  quarters  as the company  was  impacted  by  higher  construction  and  labour  costs, as well as new land conversion premium rates in Saujana Rawang.

Revising  lower  FY14  sales  target  to  MYR500m.  Management  has decided to hold back some of its launches due for FY14 in anticipation of a  recovery  in  sentiment  towards  2HCY14.  As  such,  launches  of  new projects  such  as  Phases  6  and  7  of  Lakeside  Residences  and  its Saujana  KLIA  township  have  been  deferred  to  2HCY14.  Nonetheless, we remain positive on Glomac’s long-term prospects, underpinned by its remaining  GDV  of  MYR6.8bn,  mainly  attributable  to  Lakeside Residences  (GDV:  MYR2.3bn)  and  Saujana  KLIA  (MYR1.2bn).  There could  still  be  upside  to  its  remaining  GDV,  as  the  company  recently announced  the  acquisition  of  26.2  acres  of  land  adjoining  its  existing Bandar  Saujana  Utama  township  in  Sungai  Buloh.  The  indicative  GDV for this land is MYR300m.

Forecasts.  We  have  cut  our  FY14-15  forecasts  by  7.4-10.4%  in anticipation  of  weaker  sales.  Its  steady  unbilled  sales  of  MYR792m  (vs MYR888m in 2Q) will help to sustain growth over the next 1-2 years.

Upgrade  to  BUY  (from  Trading  Buy).  We  believe  that  Glomac’s valuations are still undemanding at only 0.74x P/NAV. As expected, the cooling  measures  have  resulted  in  weaker  property  sales,  but  we  view this  as  being  largely  priced  in.  Glomac’s long-term  growth  prospects remain  positive.  We  tweak  our  FV  slightly  higher  to  MYR1.38  (from MYR1.36),  based  on  a  30%  discount  to  RNAV  after  incorporating  the additional GDV of MYR300m from its newly-acquired land.

Financial Exhibits

Financial Exhibits

SWOT Analysis

Company Profile

Glomac  is  a  developer  largely  based  in  the  Klang  Valley  with  developments  largely  concentrated  at  the  Damansara  area,  but  in  the recent years, it has diversified into township developments which have received encouraging response.

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Source: RHB