Post-visit, maintain NEUTRAL on Glomac with a RNAV-based MYR0.98 TP (from MYR0.91, 8% upside) after imputing its upcoming retail mall, Glo Damansara’s contribution. Management guided that it is looking for more landbanking opportunities in some key regions. That said, near term sales would remain sluggish, dampened by weak market sentiment and high loan rejection rates.

More value-unlocking and landbanking activities ahead. On 12 Oct, Glomac announced the disposal of 41 acres of land in Cheras within its Suria Residen project vicinity to 1Malaysia People's Housing Programme (PR1MA) for a total consideration of MYR145.6m (or MYR81 psf). The MYR83.6m net gain from the land disposal would be used for future landbanking purposes, as the company only has about 875 acres of landbank left. Management has indicated that it is looking for possible landbanking opportunities in Klang Valley, Sabah and Johor. That said, the company is not against selling more land if the opportunity arises.

Market likely to remain sluggish over the near term. Although Glomac is slated to launch up to MYR802m of projects in FY16, it acknowledges that sales is likely to remain slow as new sales are hampered by high loan rejection rates of about 50-60%. We expect 2Q new sales figure to come in below MYR100m as most launches, including the new phases of Saujana KLIA and Centro V, have been delayed to 2HFY16. Management is maintaining its new sales target at around MYR500m, which we believe is still a decent target, given that about 67% of its new launches would be landed residences and due to the positive response for its Saujana KLIA maiden launch in FY15.

Glo Damansara coming on stream. Management is targeting for its retail mall, Glo Damansara, to commence operations by 1HY16. Committed leases currently stand at about 30-40%, with its anchor tenant already secured. The mall is expected to be positioned to target the affluent Damansara/TTDI shoppers. We expect minimal cannibalisation risk from the nearby Tropicana City Mall, given the two malls’ different positioning. That said, it might take about one to two rental cycles before earnings from the mall get stable.

Maintain NEUTRAL amidst weak market sentiment. Our TP is revised to MYR0.98 after updating our RNAV calculation to include Glo Damansara and an adjustment to Suria Residen’s future GDV.

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 the recent years, it has diversified into township developments which have received encouraging response from the market.

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Source: RHB Research - 11 Nov 2015