Glomac : Prefers niche commercial property projects Outperform
1QFY10 Results
- 1QFY04/10 normalised net profit was below our expectation due to slower-than-expected commencement of construction for Glomac Damansara and higher-than-expected tax rate. In 1Q10, Glomac hit RM61m property sales, or 15% of its target sales of RM400m. This excluded Glomac Cyberjaya, bulk of Glomac Damansara and Sri Bangi-phase 3 which were launched in Jul, Mar and Aug 09, respectively. As at Jul 09, the company had unbilled sales of RM333m or 0.9x of our FY10 property development revenue forecasts.
- Key highlights from the analyst briefing: 1) enbloc sales of 25-storey corporate tower in Glomac Damansara will likely be concluded in Oct 09; 2) prefers to focus on niche commercial property projects and looking to buy commercial land in Klang Valley; and 3) intends to maintain gross dividend of 7 sen or pay more.
- Off market trade of 18.2m treasury shares at RM1.098 yesterday, or 10% discount to the current price to institutional investors. This is positive as it could raise the company’s profile among institutional investors and further improve its gearing.
- We are lowering our FY10-12 earnings forecasts by 2.5-6.3% to factor in the change in progress billing for Glomac Damansara and higher tax rate assumption. Our indicative fair value has been raised to RM1.50, based on 0.8x P/NTA. Maintain Outperform.
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