PETALING JAYA: Analysts are keeping their positive outlook over Glomac Bhd, buoyed by the group’s uplifting sales figures over its first fiscal quarter (1Q24) and its own optimistic perspective of the local property industry.
MIDF Research is expecting Glomac’s earnings to pick up in the second half of the fiscal year ending April 30, 2024 (2H24) due to pick up in progress billing of its unbilled sales.
“We note that unbilled sales stood at RM497mil in 1Q24. Besides, progress billing is expected to accelerate as the labour shortage issue is resolved. Overall, we see better earnings prospects for Glomac in FY24,” it said in a note released yesterday.
In addition, MIDF Research said Glomac reported encouraging new property sales of RM101mil in 1Q24, which was almost double the new sales of RM52mil in 1Q23.
As such, it noted that the group is anticipating new sales momentum to be stronger in 2H24 mainly due to the maiden launch of Loop City in Puchong with a gross development value (GDV) of RM338mil.
“We note that Glomac targets to launch the first phase of Loop City, which is a high-rise project in October or early November. Besides, the company will also launch projects at its existing township, Lakeside Residence, with a GDV of RM288mil.”
With these launches, the research unit is expecting new property sales in FY24 for Glomac to surpass new sales of RM302mil in FY23 and the projected strong property sales should underpin earnings growth going forward.
Meanwhile, TA Research highlighted that Glomac’s earnings optimism for 2H24 is underpinned by the recognition of progress billings for two projects, namely Plaza Kelana Jaya and 121 Residence, with one completed and the other near completion.
The research outfit reported that these projects collectively account for 42% of the group’s total unbilled sales, amounting to the aforementioned RM497mil as at the end of July.
“Additionally, Glomac is anticipating improved labour supply, stabilised raw material prices and strong new property sales to boost earnings in 2H24,” it said in a research note.
TA Research revealed that Glomac’s strong sales performance in 1Q24 was driven by robust sales of commercial properties at Lakeside Boulevard II in Puchong, including 49 shop-office units sold within three months of launch.
“Recognising the high demand for landed residential homes in the Klang Valley, Glomac accelerated the launch of semi-detached units within Lakeside Residences in Puchong, with 98 units and a GDV of RM218mil in FY24. This increased the total planned launches for FY24 to RM691mil.”
Notably, the research house said while 2Q24 is expected to be quieter due to most new launches having been scheduled for 2H24, Glomac’s management remains confident in achieving a minimum 30% growth in FY24 property sales, totalling at least RM400mil.
It commented that this target seems within reach, considering that 1Q24 sales have already contributed 25% towards the FY24 target, coupled with the higher value of planned launches compared to FY23.
“Assuming a conservative 50% take-up rate for these launches, potential sales of around RM350mil are anticipated in 2H24,” it said.
At the same time, TA Research said Glomac is intending to actively pursue opportunities to expand its land bank this year, preferably in the Klang Valley region.
Additionally, the group’s latest net gearing ratio of 0.12 times (compared to the sector average of 0.4 times) implies ample capacity to gear up to capitalise on land banking opportunities.
Both research houses are maintaining a “buy” call on the counter, with an identical target price of 47 sen.