Review

• Glomac’s 1HFY24 net profit of RM4.5mn came in below expectations, accounting for 14% of both our and consensus’s full-year forecasts, respectively. The underperformance was mainly due to lower-than-expected progress billings and property development margins.

• Year-on-year, the 1HFY24 net profit plummeted by 73% to RM4.5mn. This decline was primarily due to a 20% reduction in revenue, a decrease in EBIT margin from 22.1% to 12.9% compared to the previous year, and a 27% rise in finance costs.

• Sequentially, 2QFY23 net profit saw a significant decline of 88% to RM0.5mn compared to the immediate preceding quarter. This drastic decrease in earnings primarily resulted from a further drop in EBIT margin from 15.9% to 9.7%, driven by higher contributions from lowmargin low-cost housing projects. Higher marketing expenses (+87% QoQ) in preparation for The Loop Puchong launch, alongside elevated finance costs (+48% QoQ), also contributed to this decline.

• Glomac’s 2QFY24 new property sales declined 30% YoY and 62% QoQ to RM38mn, bringing the 1HFY24 new property sales to RM138mn (+30% YoY). The key sales contributor for the period under review was the new commercial products at Lakeside Boulevard II, Puchong. The group’s latest unbilled sales stood at RM451mn, providing earnings visibility over the next 12 to 18 months.

• The group’s balance sheet is healthy, with its latest net gearing improving further to 0.10x from 0.12x a quarter ago.

Source: TA Research - 30 Nov 2023