Review

• Glomac’s 1HFY25 net profit of RM11.3mn met expectations, representing 53% of both our and consensus full-year estimates.

• The board declared a single-tier interim dividend of 1.0 sen per share for FY25, payable on 30 December 2024.

• 1HFY25 net profit surged 148% YoY to RM11.3mn, fuelled by a 12% increase in revenue and a notable expansion in EBIT margin, which expanded from 13% to 21%. The revenue boost was supported by steady progress billings from ongoing developments, while the stronger EBIT margin was bolstered by higher contributions from commercial properties with improved profit margins.

• Sequentially, Glomac’s 2QFY25 net profit fell 45% to RM4.0mn, mainly due to lower revenue from completed properties.

• Glomac’s 2QFY25 new property sales surged 79% YoY and 240% QoQ to RM88mn, bringing 1HFY25 new property sales to RM88mn (-36% YoY). Key sales contributions came from double-storey terrace houses at Sungai Buloh Country Resort. Strong 2Q sales lifted the group’s latest unbilled sales to RM413mn, up from RM388mn recorded in 1QFY25, providing earnings visibility over the next 12 to 18 months.

• The group's balance sheet is healthy, with the latest net gearing at 0.04x.

Impact

• Maintain earnings forecasts.

Conference Call Highlights

• Despite achieving RM88mn in new sales in 1HFY25, management is optimistic about surpassing last year’s RM360mn sales. The August launch of double-storey terraces at Sungai Buloh Country Resort (GDV: RM71mn) saw strong demand, with nearly all units sold by end-Oct 2024. Looking ahead, the group is preparing to launch RM385mn worth of projects from 3QFY25 onwards. With a projected 60% take-up rate, this could add approximately RM230mn in 2H sales—a conservative estimate, as Glomac’s landed properties often sell out within a year. Additionally, contributions from Loop City Residences (GDV: RM340mn), launched in April 2024, will be instrumental in achieving the full-year sales target.

• Management is actively exploring opportunities to expand its land bank, focusing on high-demand areas such as the Klang Valley and Johor. The strategy includes acquiring land suitable for both township developments and quick-turnaround high-rise projects. With a low net gearing ratio of 0.04x (well below the sector average of 0.4x), the group is wellpositioned to leverage its financial strength to seize land-banking opportunities and drive future growth.

• Glomac’s long-term prospects remain solid, underpinned by a robust balance sheet and a substantial pipeline of development projects with a potential GDV of RM7.0bn.

Valuation

• We maintain Buy on Glomac with an unchanged target price of RM0.64/share, based on CY25 P/Bk multiple of 0.4x.

Source: TA Research - 28 Nov 2024