KEY INVESTMENT HIGHLIGHTS

• 1HFY25 earnings within expectations
• Margin expansion in 1HFY25
• New sales picked up in 2QFY25
• Earnings estimates maintained
• Maintain NEUTRAL with an unchanged TP of RM0.39

1HFY25 earnings within expectations. Glomac Berhad (Glomac) 1HFY25 core net income of RM11.3m came in within expectations, making up 53% of ours and consensus full year forecast. Glomac announced first interim dividend of 1sen per share.

Margin expansion in 1HFY25. On a sequential basis, 2QFY25 core net income eased to RM3.98m (-45.3%qoq), in line with lower topline (- 23%qoq). Earnings in 2QFY25 normalised from a high base in 1QFY25 as earnings in 1QFY25 were boosted by the sale of completed properties.

On a yearly basis, 2QFY25 core net income surged to RM3.98m from RM480k in 2QFY24 as earnings in 2QFY24 were dragged by earnings recognition of lower margin products namely Seri Kenanga RSKU at Saujana Utama. That brought 1HFY25 core net income higher at RM11.3m (+147.5%yoy). Notably, the gross profit margin expanded to 30.3% in 1HFY25 from 24% in 1HFY24 as margin normalized. Meanwhile, key revenue contributors in 1HFY25 were ongoing projects namely Saujana Perdana, Plaza@Kelana Jaya and 121 Residences.

New sales picked up in 2QFY25. Glomac recorded higher sales of RM68m in 2QFY25 from RM20m new sales in 1QFY25. New sales in 2QFY25 were mainly driven by terrace houses at Serai@SBCR, Bandar Saujana Utama. Demand for landed houses at Bandar Saujana Utama remains strong with Serai@SBCR nearly fully sold within 3 months of launch. Looking ahead, management expects the new sales momentum to be stronger in 2HFY25 on the back of planned launches with GDV of RM385m in 2HFY25. On the other hand, unbilled sales increased to RM413m in 2QFY25 from RM388m in 1QFY25, providing more than one year earnings visibility.

Maintain NEUTRAL with an unchanged TP of RM0.39. We are making no changes to our earnings forecast for FY25F/26F/27F. We also maintain our TP for Glomac at RM0.39, based on 82% discount to RNAV. Overall, we see that the new sales outlook for Glomac will be supported by new launches of landed properties going forward, we are maintaining our NEUTRAL call on Glomac due to limited upside.

Source: MIDF Research - 28 Nov 2024