Thursday, 21 March 2013

Glomac - Earnings Growth Sustaining Dividend


We maintain our Neutral rating with a fair value of RM0.93. 3QFY13 results came in within expectations. Glomac secured RM136m sales in 3QFY13, mainly contributed by the township projects. This has boosted unbilled sales to RM827m and YTD property sales to RM519m, well within our expectation. A 3 sen dividend was declared, and we expect a 3.5 sen final dividend. Our forecast DPS of 6.5 sen translates into a gross yield of 6.6%.

Within expectations. Glomac’s 3QFY13’s results came in within expectations. Earnings were mainly from the progress billings of Glomac Damansara, Reflection Residences, Bandar Saujana Utama and Saujana Rawang. Compared to 10% sequential growth, 9MFY13 PBT contracted 5%, as FY12 earnings were lifted by the one-off RM9m gain from the disposal of a warehouse in Thailand, as well as the cost savings arising from the completion of Glomac Tower last year.

9M RM519m sales. Glomac achieved RM136m sales in 3QFY13, compared to RM171m sales in 2QFY13. The township projects such as Saujana Utama and Saujana Rawang are the key contributors, making up more than half of the total. We expect Glomac to end the year with RM750-800m sales. The recent booking for the launch of Lakeside Residences will be converted into sales in 4QFY13. Response for this new township project in Puchong has been encouraging. The first two phases were fully sold within a day through balloting process. The next phase comprising 75 units terraces will be launched in the next weekend. Selling prices have seen a gradual step-up of about 5-10% by phases. The terraces in the coming launch will be priced at about RM800k. Meanwhile, sales at Glomac Centro, comprising 54 units shop offices and 344 units serviced apartments, were improving gradually with the latest take-up rate at 51%, after the connectivity is enhanced.

Forecasts. Unchanged.

Investment case. As the general election is getting nearer, we maintain our Neutral rating on the stock and fair value of RM0.93 unchanged, based on 35% discount to RNAV.

Source: RHB

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