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Earnings Almost Spot On
Glomac’s FY10 results were almost spot on with our estimates and 9% above consensus numbers. Although y-o-y FY10 turnover dipped 8%, net profit jumped 27% as progress billings on some of its high-margin projects picked up pace as well as recognition of earnings from some land sale and gains from the monetisation of two investment assets. Incorporating certain key launches slated for FY11 into our forecasts, we are upgrading our FY11 earnings forecast marginally by 8.5% and introduce our FY12 numbers. The proposed final dividend of 4.5 sen was better than we expected, bringing the total FY10 gross dividend to 8.5 sen (vs 7.0 sen in FY09). Despite the earnings upgrade, we are fine-tuning our CY10 target price to RM1.81 (from RM1.83) to reflect some marginal fine-tuning to certain balance sheet items. Maintain Trading Buy.
Strong earnings recovery, margin expansion. Although FY10 turnover fell marginally by 8% y-o-y, net profit improved significantly by 27%. Turnover fell due to: (i) full completion of Suria Stonor, a key earnings contributor in FY09; and (ii) the full impact from recently launched projects such as Glomac Damansara and Glomac Cyberjaya would only be felt more meaningfully in FY11 and onwards as progress billings pick up. On the other hand, the improvement in bottom line and earnings margin expansion was mainly due to: (i) stronger earnings from Bandar Saujana Utama and the high-margin Glomac Tower as well as, to a smaller extent, Glomac Damansara; and (ii) gain from the recent monetisation of Wisma Glomac 3 and Block B Glomac Business Centre.
A great year = higher dividend. With much improved earnings performance in FY10, the final dividend of 4.5 sen beat our expectation. This brings the total FY10 gross dividend to 8.5 sen (vs. 7.0sen in FY09). Based on the last closing price, this would translate into a gross yield of 6.7%.
Earnings forecasts upgraded. Management guided that Glomac would be launching its RM145m retail mall and RM240m 2-block serviced apartments, both in Glomac Damansara, in FY11. As the former is likely to be marketed as an en bloc sale and to be prudent, we are not including this into our earnings forecast for now. Incorporating the latter project into our earnings forecast, with construction works to begin in 2HFY11, we are upgrading our FY11 earnings projection marginally by 8.5%.
Maintain Trading Buy. Despite the earnings upgrade, we are fine-tuning our CY10 target price to RM1.81 (from RM1.83) based on 0.94x CY10 P/NTA, at which most mid-cap property stocks are trading, to reflect some fine-tuning on certain balance sheet items. Maintain Trading Buy.
Glomac’s FY10 results were almost spot on with our estimates and 9% above consensus numbers. Although y-o-y FY10 turnover dipped 8%, net profit jumped 27% as progress billings on some of its high-margin projects picked up pace as well as recognition of earnings from some land sale and gains from the monetisation of two investment assets. Incorporating certain key launches slated for FY11 into our forecasts, we are upgrading our FY11 earnings forecast marginally by 8.5% and introduce our FY12 numbers. The proposed final dividend of 4.5 sen was better than we expected, bringing the total FY10 gross dividend to 8.5 sen (vs 7.0 sen in FY09). Despite the earnings upgrade, we are fine-tuning our CY10 target price to RM1.81 (from RM1.83) to reflect some marginal fine-tuning to certain balance sheet items. Maintain Trading Buy.
Strong earnings recovery, margin expansion. Although FY10 turnover fell marginally by 8% y-o-y, net profit improved significantly by 27%. Turnover fell due to: (i) full completion of Suria Stonor, a key earnings contributor in FY09; and (ii) the full impact from recently launched projects such as Glomac Damansara and Glomac Cyberjaya would only be felt more meaningfully in FY11 and onwards as progress billings pick up. On the other hand, the improvement in bottom line and earnings margin expansion was mainly due to: (i) stronger earnings from Bandar Saujana Utama and the high-margin Glomac Tower as well as, to a smaller extent, Glomac Damansara; and (ii) gain from the recent monetisation of Wisma Glomac 3 and Block B Glomac Business Centre.
A great year = higher dividend. With much improved earnings performance in FY10, the final dividend of 4.5 sen beat our expectation. This brings the total FY10 gross dividend to 8.5 sen (vs. 7.0sen in FY09). Based on the last closing price, this would translate into a gross yield of 6.7%.
Earnings forecasts upgraded. Management guided that Glomac would be launching its RM145m retail mall and RM240m 2-block serviced apartments, both in Glomac Damansara, in FY11. As the former is likely to be marketed as an en bloc sale and to be prudent, we are not including this into our earnings forecast for now. Incorporating the latter project into our earnings forecast, with construction works to begin in 2HFY11, we are upgrading our FY11 earnings projection marginally by 8.5%.
Maintain Trading Buy. Despite the earnings upgrade, we are fine-tuning our CY10 target price to RM1.81 (from RM1.83) based on 0.94x CY10 P/NTA, at which most mid-cap property stocks are trading, to reflect some fine-tuning on certain balance sheet items. Maintain Trading Buy.
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