Maybank Research's Buy call on Glomac

KUALA LUMPUR: Maybank Investment Research has initiated coverage on Glomac with a Buy call and RM1.78 target price (41% upside), on its attractive value proposition and explosive earnings growth driven by upcoming high-margin commercial projects.

In a research note issued on Monday, Oct 12, it said the completion of the Suria Stonor luxury condominium and ongoing Glomac Tower in KLCC has elevated the group's profile.

"Coupled with its proven track record, Glomac deserves a re-rating," it said, adding it expects Glomac to turn in a strong 13% earnings per share (EPS) compounded annual growth rate (CAGR) over 2009-12, with potential upside surprises from ongoing enbloc sales negotiations worth RM345 million.

Earnings growth would be underpinned by a substantial margin expansion owing to an improved product mix and also unbilled sales of RM484 million (at July 31, 2009) or 1.5 times FY09 development revenue.

Other positive factors for Glomac were higher RM160 million new sales between May 1 and Sept 30  (FY09: RM172 million), and remaining gross development value more than RM3 billion to last another seven to eight years, with RM501 million new launches targeted for FY10.