Glomac Bhd (Dec 4, 79.5 sen)
Maintain market perform at 80.5 sen with a fair value of 93 sen: Glomac Bhd’s second quarter financial year 2013 (2QFY13) net profit of RM23.9 million (+38.5% year-on-year [y-o-y]; +14% quarter-on-quarter [q-o-q]) came in within our estimate but below market consensus. Turnover for the quarter declined q-o-q due to slower progress billings.
Township projects such as Bandar Saujana Utama, Saujana Rawang and Glomac Damansara are the key contributors during the quarter. First half (1HFY13) profit before tax margin improved slightly even after taking into account the one-off gain of RM6.5 million arising from the disposal of the Thai investment in 1HFY12.
Glomac achieved RM171 million in new sales in 2QFY13, compared with RM212 million in the preceding quarter. This brought 1HFY13 new sales to RM383 million. Key projects that underpinned the sales in 2Q are Lakeside Residences Puchong (RM54 million), Saujana Rawang (RM87 million), Bandar Saujana Utama (RM77 million), as well as the continued sales flow from Reflection Residences and Glomac Centro.
Unbilled sales amounted to RM835 million against RM763 million in 1QFY12. We expect another RM21 million sales from Lakeside Residences in the next quarter as Sonata’s phase two (GDV or gross development value of RM75 million) was fully sold within a day via balloting. Sales of Glomac Centro serviced apartments have yet to pick up, as Glomac recently completed the widening of an access road and viewing deck for the project. It was only relaunched in mid-November.
More phases of Lakeside Residences will be unveiled as a total of RM223 million in GDV is slated for launch in FY13. So far, only RM75 million worth of properties were put into the market in 1H.
Symphony’s phase three, which comprises 139 units of 2-storey terraces (RM94 million), is targeted for launch in January, while phase four is worth a GDV of RM54 million. About 51 units of terraces in Bandar Saujana Rawang will also be launched this month, after 126 units were fully sold in October.
The two potential en-bloc transactions, Glomac Damansara retail mall and Plaza Kelana Jaya, when materialised could surprise sales on the upside. Management indicated that negotiations are still ongoing.
Our forecasts remain unchanged. Risks include downside to economic growth, dampening demand for properties.
The market sentiment on the property sector is likely to remain cautious ahead of the general election. We maintain our “market perform” rating on the stock. Fair value is at 93 sen, based on a 35% discount to our revised net asset value. — RHB Research, Dec 4
This article first appeared in The Edge Financial Daily, on Dec 5, 2012.