KEY INVESTMENT HIGHLIGHTS

• 1QFY25 earnings deemed within expectations
• Earnings driven by sale of completed properties
• Weak new sales of RM20m in 1QFY25
• Earnings estimates maintained
• Maintain NEUTRAL with a revised TP of RM0.39

1QFY25 earnings deemed within expectations. Glomac Berhad (Glomac) 1QFY25 core net income of RM7.28m deemed within expectations despite making up 34% and 39% of ours and consensus full year forecast respectively as 1QFY25 earnings were lifted by sales of completed properties while earnings are expected to normalize in 2QFY25.

Earnings driven by sale of completed properties. On sequential basis, Glomac returned to the black by recording core net profit of RM7.28m in 1QFY25 against core net loss of RM1.8m in 4QFY24 mainly due to sale of completed properties namely Suria Stonor which supported topline growth (+19.2%qoq). The earnings growth is also helped by the lower finance cost (-37%qoq). On a yearly basis, 1QFY25 core net income was higher (+79%yoy) mainly due to the sale of Suria Stonor. On another note, the balance sheet of Glomac remains healthy with a low net gearing of 0.06x.

Weak new sales of RM20m in 1QFY25. Glomac recorded weaker new sales of RM20m in 1QFY25 against strong sales of RM218m in 4QFY24. New sales in 1QFY25 were contributed mainly by Suria Stonor at RM12m.

New sales in 1QFY25 were slow as new launches are scheduled from 2QFY25 onwards. Looking forward, new sales are expected to pick up in 2HFY25 with RM450m planned launch. On the other hand, unbilled sales declined to RM388m in 1QFY25 from RM504m in 4QFY24, providing more than one year of earnings visibility.

Maintain NEUTRAL with a revised TP of RM0.39. We have made no changes to our earnings forecast for FY25F/26F/27F. We revised our TP for Glomac to RM0.39 from RM0.43 as we widened our RNAV discount to 82% from 80% in view of the weaker new sales. While the earnings outlook for Glomac is expected to be stable going forward, we maintain our NEUTRAL call on Glomac due to limited upside.

Source: MIDF Research - 19 Sep 2024