Dec 24, 2009

Glomac outperform w target price RM.164

Inter-Pacific Research Sdn Bhd has upgraded GLOMAC BHD  to outperform at RM1.20 with a target price of RM1.64 pegged to forward EPS of 14.9 sen and P/E of 11 times.

The research house said it revised its valuation upwards after taking into consideration unbilled sales worth RM600 million, strong sales performance by achieving 90% of CY09 target sales, strong cash position and supported by total GDV of RM2.5 billion which will sustain Glomac's growth for at least five years.

Commenting on the company's financial results, Inter-Pacific Research said year-to-date (YTD) revenue fell 21.1% as the key contributor for 1HFY2009 top line ie Suria Stonor was fully completed.

1HFY2010 revenue comes from Glomac Tower, which is 30% completed and Bandar Saujana Utama Township projects. Other unbilled projects like Glomac Cyberjaya and Glomac Damansara are at the initial stages of CONSTRUCTION [].

Thus, their revenue contribution is kicking-in at slower pace compared to 1HFY09, it said.

Revenue rose 28.2% quarter-on-quarter mainly due to 26.4% increase in revenue contribution from property development segment, said the research house.

YTD pre-tax profit rose 27.7% mainly due to contribution from the high margin Glomac Tower project and fair value adjustment of RM4.9 million on investment PROPERTIES [], it said.

"Glomac is currently in a net cash position of RM19.9 million, benefitting from the sales of treasury shares of RM19.8 million and part proceeds from the disposal of Wisma Glomac 3. Their cash position should improve further, benefiting from the balance of sales consideration from Wisma Glomac 3 and RM22.6 million sale proceeds from Block B Glomac Business Centre.

"This will enable them to continue focusing on their land banking activities, with preference of niche commercial development on strategic location," it said.

Inter-Pacific Research said Glomac had achieved commendable sales performance of RM155 million in H1FY10, which is 90% of full year sales achieved in FY09.

The main contributor to strong sales performance includes Glomac Damansara (17.4% of total sales), Glomac Cyberjaya (30.3%), Seri Bangi (21.3%) and Bandar Saujana Utama (21.3%), it said.

As at Oct 31, unbilled sales accumulate to RM369 million excluding sales of Glomac Damansara 25 storey office tower and Glomac Cyberjaya Phase 2. Taking into account both transactions, unbilled sales would stand at RM600 million, it said.  source theedge