MIDF downgrades Glomac on lower property sales

Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Wednesday, 04 December 2013 11:15
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KUALA LUMPUR (Dec 4): MIDF Research downgraded Glomac Bhd in
anticipation that its property sales will be flattish or lower by 10% year-on-year
(y-o-y) in financial year ending April 30, 2014 (FY14).
In a note today, MIDF said following the introduction of anti-speculative
measures for the real estate sector in Malaysia, Glomac is prompted to
re-strategise.
MIDF analysts Kelly Tan and Sean Liong Cheng Fatt said: “ Glomac will now be
holding back on the launch of Phase 2 of its mixed high-rise development
Centro V.
"Hence, total estimated launches for FY14 are expected to decline from
RM1.3b to RM1.0b. This gives rise to a possibility that sales may remain flattish
or slip
10% yoy in FY14 (former sales expectation: flat)".
They said Glomac’s 1HFY14 results indicate that sales dropped 30.8% y-o-y to
RM265 million. The decline was due to the absence of new project launches in
1HFY14 and Glomac’s decision to slow the pace of launches for its ongoing
projects ahead of Budget 2014.
"We are revising downward our earnings forecasts for FY13 and FY14 by 8.1%
and 15.7% respectively in line with management expectation of 10% yoy
decline in total sales for FY14.
"We arrived at a lower target price of RM1.39 (from RM1.46) by ascribing PER
of 8.7X against FY15 EPS of 16.7 sen," the analysts said.
The analysts said Glomac’s 1HFY14 earnings were within expectation. The figure accounted for 53% and 49% of MIDF's and consensus
forecast respectively.