September 22, 2010

GLOMAC - ECM Libra Research: Glomac 1Q earnings above expectations

Stock Name: GLOMAC
Company Name: GLOMAC BHD
Research House: ECMLIBRA

KUALA LUMPUR: ECM Libra Research said Glomac's 1QFY11 results came in above house and market expectations as net profit of RM15.6 million already made up 33% and 35% of house and consensus full-year estimates respectively.

It said on Wednesday, Sept 22 that 1QFY11 revenue of RM126.3 million was 114.1% higher on-year as the Glomac Tower project is now in full swing. Revenue was also higher because new projects such as Glomac Damansara and Glomac Cyberjaya have also progress beyond initial stage.

ECM Libra said Glomac achieved decent property sales of RM80 million in 1QFY11 which was significantly lower as compared to RM277 million in 4QFY10 but that was mainly due to en bloc sale of Tower D, Glomac Damansara (RM170.7 million) in the preceding quarter.

'Unbilled sales was marginally lower at RM585 million (4QFY10: RM588 million) but otherwise is near record high and will provide earnings visibility over next two-three years,' it said.

The research house raised its FY11 and FY12 estimates by 24% and 19% respectively after imputing higher margins.

It also introduced FY13 numbers into its earnings model. Glomac remains a BUY premise upon its 3-year earnings CAGR of 19.4%.

'Our earnings upgrade led to TP revision from RM1.87 to RM1.93 but we peg a lower P/E target of 10 times (previously 12 times) to account for risk for mortgage lending restriction,' it said.


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