Review

• Glomac’s 1QFY25 core net profit of RM7.3mn exceeded expectations, accounting for 41% of our full-year forecast and 39% of the consensus estimates. This outperformance was primarily driven by higher-thananticipated development margins.

• 1QFY25 net profit surged 79% YoY to RM7.3mn, fuelled by a 22% increase in revenue and a notable expansion in EBIT margin, which grew from 15.9% to 22.0%. The revenue boost was supported by steady progress billings from ongoing developments, while the stronger EBIT margin was bolstered by higher contributions from commercial properties with improved profit margins.

• Sequentially, Glomac returned to profitability in 1QFY25, recovering from a core net loss of RM1.8mn in 4QFY24. This turnaround was driven by stronger revenue and improved profit margins.

• Glomac recorded just RM20mn in new sales for 1QFY25, as new launches for FY25 are set to roll out starting from 2QFY25. The group's latest unbilled sales stand at RM388mn, offering earnings visibility for the next 12 to 18 months.

• The group's balance sheet is healthy, with the latest net gearing at 0.06x.

Impact

• Maintain earnings forecasts pending a meeting with management later.

Outlook

• Management anticipates a boost in new sales, fuelled by upcoming FY25 launches worth RM459mn and the RM340mn Loop City Residences, which debuted at the end of April 2024. This pipeline of projects is expected to drive sales momentum as the year progresses.

• Glomac’s long-term prospects remain solid, underpinned by a robust balance sheet and a substantial pipeline of development projects with a potential GDV of RM7.0bn.

Valuation

• We maintain Buy on Glomac with an unchanged target price of RM0.62/share, based on CY25 P/Bk multiple of 0.4x.

Source: TA Research - 19 Sept 2024