Glomac’s 4QFY15 results came in within expectations. Upgrade to NEUTRAL with an unchanged MYR0.88 TP (10% upside), given stronger unbilled sales and hence earnings visibility. FY15 new sales achieved MYR506m (vs MYR504m in FY14) as sales from Saujana KLIA and Lakeside Residences kicked in. In FY16, the developer will launchMYR802m worth of projects, with key focus still on landed housing.

Within expectations. Glomac’s 4QFY15 (Apr) core net profit was within our and market expectations. Earnings during the quarter saw higher progress billings from its existing projects, such as Saujana Rawang Glomac Centro and Reflection Residences. FY15 headline net profit was lifted by a MYR30.2m fair value gain in 3QFY15 from the reclassification of Glo Damansara as an investment property. Meanwhile, a 2.25 sen single-tier final dividend was declared, bringing ful l-year dividend to 4.25 sen, lower than last year’s 4.9 sen.

MYR506m new sales in FY15. New sales jumped significantly in 4QFY15 by MYR420m (vs MYR26m in 3QFY15), bringing full-year new sales to MYR506m from MYR504m in FY14. The boost in 4Q was mainly contributed by Saujana KLIA (MYR241m) and Lakeside Residences (MYR102m). Take-ups for Saujana KLIA have been encouraging, at >90% for the initial launches in Jan-Mar this year. Pricing for the landed terraces was reasonable at MYR460,000-520,000each, and 2-storey shop lots at MYR800,000 each. Going forward, management will concentrate on lande housing, and the upcoming launches will include Saujana KLIA terrace houses (GDV: MYR275m), Saujana Jaya Kulaijaya affordable homes (GDV: MYR74m), Lakeside Residences terraces (GDV: MYR66m), Centro V serviced apartments and shop lots (GDV: MYR263m).

Forecasts. After we update the latest numbers, we adjust our FY16-17 earnings forecasts higher by 21% and 43%, respectively, as we expect the effective tax rate to normalise. As a result of the strong sales in 4Q, unbilled sales rose to MYR796m in 4QFY15 vs MYR537m in 3QFY15.

Upgrade to NEUTRAL. Glomac’s share price has fallen since Jan 2015. Given the strong unbilled sales and hence earnings visibility, we upgrade the stock to NEUTRAL (from Sell) with an unchanged TP of MYR0.88, based on a 55% discount to RNAV.