Glomac (GLMC MK, BUY, FV RM1.04, Last Price RM0.87)

At a glance, it would  appear that Glomac’s 9MFY12 results were  above our and consensus estimates, but excluding  a gain on disposal of an associate,  its core net profit was largely within our expectation, accounting  for 73.2% of our FY12 forecast. Revenue  fell  8.1% y-o-y  on  completion of Glomac  Tower and Glomac Galleria but core net profit spiked up by almost 19% y-o-y, attributed to lower MI charges and improved margins. We maintain our forecasts and BUY recommendation at  an  unchanged FV of RM1.04, based on 0.9x CY12 P/NTA,which is about 1.0σ above the stock’s 10-year historical mean.

Largely within forecasts. Glomac reported a net profit of RM63.5m for 9MFY12, which included a net gain on disposal of its 49% stake in Thailand-based WHA Glomac Alliance Company Limited.  Excluding this  disposal gain, Glomac core net profit  stood  at RM57.1m, accounting  for around 73.2% of our FY12 net profit forecast. For 1HFY12, revenue was down by 8.1% y-o-y, largely due to the completion of two of its projects namely Glomac Tower and Glomac Galleria. Despite the marginal revenue drop, core net profit was up by about 19% y-o-y, attributed to lower MI charges following the completion of Glomac Tower, which was undertaken by a JCV on a 51:49 basis.

Healthy growth. Glomac recorded total sales more than RM343m for 9MFY12, fuelled by the strong response to its township projects in Bandar Saujana Utama and Saujana Rawang, as well as contributions from Glomac Damansara Residences. The company’s unbilled sales were healthy and slightly higher at RM588m as at end-3QFY12. Excluding the RM1.4bn worth of properties that the company currently has or will launch in FY12, Glomac has a strong pipeline of strategic projects with a total GDV of more than RM3bn for launch beyond FY12. Given its healthy balance sheet, we believe Glomac would have the financial muscle to acquire more landbank as well as participate in the privatization of government land.

Maintain BUY. We maintain our forecasts and BUY recommendation at  an unchanged FV of RM1.04, based on 0.9x CY12 P/NTA, which is about 1.0σ above its 10-year historical mean.

Source: OSK188