Glomac’s 4QFY14 results were in line with estimates. In FY15, management plans to launch projects worth c.MYR1.0bn, of which 60% will be landed properties. It has also guided for a total new sales target of MYR800m in FY15. Long-term prospects remain strong, underpinned by its future GDV of MYR8.1bn (including those in FY15) and unbilled 
sales of MYR714m. Maintain BUY and a MYR1.38 FV.

♦  Within expectations.  Glomac’s 4QFY14 net profit of MYR22.1m (-29.3% y-o-y; -2.9% q-o-q) brought FY14 net profit to MYR108.1m (+6.5% y-o-y), in line with estimates. Despite the lack of new launches, revenue growth was sustained by the progress billings from key projects such as Lakeside Residences and Saujana Rawang. A final dividend of 2.65 sen per share was proposed, bringing total FY14 dividends to 4.9 sen.

♦  Targeting MYR1.0bn worth of new launches and MYR800m new sales.  Glomac will be more aggressive in FY15 after deferring some of its launches in FY14 due to the weak sentiment affecting the overall property market in 2HFY14. Management has guided for projects with a MYR1.0bn GDV to be launched during FY15. Amongst the major launches are Glomac Centro V (GDV: MYR263m) and Plaza Kelana Jaya Phase 4 (GDV: MYR250m). The maiden launch of Saujana KLIA is slated for Jan 2015, which has a GDV of MYR101m for the initial phase. Over 60% of the FY15 launches will be landed properties, which should suit market conditions. Going forward, management will continue to focus on landed properties, and its new landbank in Sungai Buloh and Kulaijaya have been earmarked for future landed developments. Given the pipeline of launches, Glomac has set a bullish sales target of MYR800m for FY15, some 60% higher than MYR504m in FY14.

♦  Forecasts. We reduce our FY15 net profit forecast by 7% after revising our assumptions and updating the FY14 numbers. We also introduce our FY16 numbers with a flattish growth to reflect FY14’s weak sales. Unbilled sales remained resilient at MYR714m (vs MYR792m in 3Q14).

♦  Maintain BUY. Glomac’s valuations are currently undemanding, at only 0.65x P/NAV, which has already reflected the weak property market. We expect the demand for property to pick up in 2H. Maintain BUY, and a MYR1.38 FV, based on a 30% discount to RNAV.

Financial Exhibits

SWOT Analysis

Company Profile

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

Recommendation Chart

Source: RHB