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4QFY10 : Set for more growth ahead
• Earnings inline but dividends above expectations
Glomac’s FY2010 results came in within house expectation but slightly ahead of consensus. Excluding provision of CLO sub-bonds of RM1.9m, adjusted net profit of RM42.6m was 2.6% and 6.1% above house and consensus estimates respectively. Another pleasant surprise came in the form of higher second and final net dividend of 3.4 sen, which brings full year net DPS to 6.4 sen as compared to 5.9 sen in FY2009.
• Higher margin
FY10 revenue of RM317.8m was 7.9% lower due to completion of Suria Stonor in FY09. However, reported net profit increased by 27.3% to RM40.7m due to increasing contribution from higher margin project such as Glomac Tower. EBIT margin has increased from 14.8% to 21.6%.
• Highest ever unbilled sales of RM588m
A bumper property sales of RM277m was achieved in 4QFY10 on the back of the en bloc sale of Tower D, Glomac Damansara (RM170.7m) while RM508m was achieved for FY10 as compared to RM172m in FY09. Accordingly, Glomac secured its highest ever unbilled sales of RM588m, which is almost twice its annual revenue. The unbilled sales will provide earnings visibility over next 2-3 years. For FY11, management is planning RM621m of new launches.
• Strong position to acquire more landbanks
Glomac is in a strong financial position following divestment of investment properties and placement of treasury shares which raised RM92.9m. Although net gearing stayed flat at 0.12x y-o-y, the company will be in net cash position if RM84.8m of short-term investment is taken into account. Assuming a maximum net gearing of 0.5x, the company can raise RM260m for landbank acquisitions. Assuming land cost makes up 10%-20% of GDV, Glomac has the potential to increase its remaining GDV of RM2.5bn by 50%-100%.
• Reiterate BUY call
We reiterate our buy call premise upon Glomac’s 2-year earnings CAGR of 14.1% with an undemanding implied PEG ratio of just 0.6x. We tweaked FY11 and FY12 earnings by -0.3% and -1.9% for housekeeping changes. Target price has been raised to RM1.87 from RM1.80 as we rollover our valuation to FY11 by continuing to peg a 12x P/E.
• Earnings inline but dividends above expectations
Glomac’s FY2010 results came in within house expectation but slightly ahead of consensus. Excluding provision of CLO sub-bonds of RM1.9m, adjusted net profit of RM42.6m was 2.6% and 6.1% above house and consensus estimates respectively. Another pleasant surprise came in the form of higher second and final net dividend of 3.4 sen, which brings full year net DPS to 6.4 sen as compared to 5.9 sen in FY2009.
• Higher margin
FY10 revenue of RM317.8m was 7.9% lower due to completion of Suria Stonor in FY09. However, reported net profit increased by 27.3% to RM40.7m due to increasing contribution from higher margin project such as Glomac Tower. EBIT margin has increased from 14.8% to 21.6%.
• Highest ever unbilled sales of RM588m
A bumper property sales of RM277m was achieved in 4QFY10 on the back of the en bloc sale of Tower D, Glomac Damansara (RM170.7m) while RM508m was achieved for FY10 as compared to RM172m in FY09. Accordingly, Glomac secured its highest ever unbilled sales of RM588m, which is almost twice its annual revenue. The unbilled sales will provide earnings visibility over next 2-3 years. For FY11, management is planning RM621m of new launches.
• Strong position to acquire more landbanks
Glomac is in a strong financial position following divestment of investment properties and placement of treasury shares which raised RM92.9m. Although net gearing stayed flat at 0.12x y-o-y, the company will be in net cash position if RM84.8m of short-term investment is taken into account. Assuming a maximum net gearing of 0.5x, the company can raise RM260m for landbank acquisitions. Assuming land cost makes up 10%-20% of GDV, Glomac has the potential to increase its remaining GDV of RM2.5bn by 50%-100%.
• Reiterate BUY call
We reiterate our buy call premise upon Glomac’s 2-year earnings CAGR of 14.1% with an undemanding implied PEG ratio of just 0.6x. We tweaked FY11 and FY12 earnings by -0.3% and -1.9% for housekeeping changes. Target price has been raised to RM1.87 from RM1.80 as we rollover our valuation to FY11 by continuing to peg a 12x P/E.
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