Investment Highlights

• We maintain HOLD recommendation on Glomac with unchanged fair value (FV) of RM0.40/share, based on a 4 discount to our RNAV. The FV implies FY26F PE 17x - 20% premium to its 4-year average of 14x and reflects unchanged neutral ESG rating of 3 stars.


• Our earnings forecasts are unchanged as we deem Glomac 1QFY25 core net profit (CNP) of RM7m as within expectations even though accounting for 44% of our FY25F net profit and 3 of street's.


• YoY, the group's 1QFY25 CNP soared 75% YoY due to revenue rising 22% YoY to RM73m, which drove EBITDA margin 5.5%-point to 22%. This mainly stemmed from lumpy sale completed units worth RM23m - 31% of 1QFY25 revenue.


• We estimate that this one-off sale generated a gross profit of RM5m-RM6m - 70%-80% of 1QFY25 net profit. Hence, the strong earnings delivery may not be sustainable in the coming quarters.


• Sequentially, Glomac's 1QFY25 CNP rebounded from a 4QFY loss of RM3m due to the completed unit sales while the previous quarter experienced slower progress billings.


• Glomac secured new sales of only RM20m in 1QFY25 mainly from inventory units vs. RM217m in 4QFY24 and RM101m in 1QFY24 as new launches are scheduled from 2QFY25 onwards. The lack of new launches, minimal new sales and progress billings at Lakeside Residences, Saujana Perdana and Saujana KLIA caused unbilled sales to drop 23% QoQ to RM388, translating to an unexciting 1.1x FY25F revenue.


• Glomac has revised FY25F planned launches to RM459m (+ from RM425m previously) vs. FY24 sales of RM360m. This includes the launch of RM174m worth of double-storey houses - RM66m at RM585k each at Serai@Sungai Buloh Country Resort, Bandar Saujana Utama in 2QFY25 and RM65m at RM603k each at Saujana KLIA, Sepang as well as RM43m at RM630k each in Saujana Jaya, Kulai in 3QFY25.


• In 4QFY24, Glomac plans to launch RM192m semi-detached houses priced at RM2.7mil each at Keys, Lakeside Residences and RM93m shop offices priced at RM930k at Saujana Perda Sg. Buloh.


• Nonetheless, given the group's quarterly progress billings of RM60m-RM70m, we expect unbilled sales to remain relatively flat QoQ in 2QFY25.


• Hence, Glomac currently trades at a premium FY26F PE of 1 vs. a 4-year average of 14x with a fair dividend yield of 3%.

Source: AmInvest Research - 19 Sep 2024