Glomac sees flattish FY12 property sales

PETALING JAYA: A slowdown in the property market seems inevitable as the volatile external landscape has battered market confidence, said Glomac Bhd chief, adding that the developer’s current year property sales could be flattish against the current landscape.

Group managing director and CEO Datuk FD Iskandar Mansor said Glomac’s property sales in FY12 ending April 30, could be almost similar to the RM418 million achieved in FY11.

Glomac has raked in RM100 million in property sales in 1QFY12.

“The trend is about the same,” Iskandar told reporters after the company shareholders’ meeting yesterday. The developer had sold RM508 million worth of properties in FY10.

He said local consumer sentiment was affected despite the cash available and domestic financial institutions are still flush with liquidity.

Iskandar also said the policymakers’ decision to implement a lower maximum loan to value ratio for third home loans at 70% and their proposal to change the loan computation based on net income instead of gross income could affect real estate sales in the country.

“There will definitely be a slowdown in terms of property sales. But we should maintain our performance or do a little bit better compared with last year,” he said.

According to Iskandar, Glomac’s earnings will be strengthened by an estimated RM1.2 billion worth of launches in the Klang Valley in FY12 and unbilled sales of RM550 million.
Iskandar: Glomac's RM550m of unbilled sales to sustain the group's earnings for the next two years.

The launches are the Mutiara Damansara Residences, Glomac Damansara and Glomac Utama phase 1 projects. These projects have gross development values of RM250 million each. The developer also plans to market RM295 million worth of properties from its township projects apart from the RM200 million Glomac Cyberjaya.

Iskandar said Glomac’s RM550 million worth of unbilled sales are expected to sustain the group’s earnings for the next two years.

“We are looking at en bloc sales of our commercial properties,” he said, adding that these transactions could involve local and foreign buyers. Glomac’s commercial portfolio includes its Glomac Damansara, Glomac Cyberjaya and Plaza Kelana Jaya projects.

The company’s financials have improved. Net profit rose 15% to RM17.87 million in 1Q ended July 31 this year compared with RM15.56 million the previous year as revenue climbed 1% to RM127.83 million from RM126.31 million.

The company had cash of RM361.63 million against debts of RM345.65 million as at July 31, translating into a net cash position of RM15.98 million or five sen a share. Glomac has an issued base of 302.47 million shares.

Iskandar said Glomac’s strong balance sheet would give it the financial muscle to acquire more landbank, especially within the greater Kuala Lumpur enclave. He also indicated that Glomac is keen to participate in the privatisation of government land.

“Given a chance, of course we would like to participate,” he said.

Glomac has 1,000 acres (400ha) of landbank which is mostly undeveloped in the country. These tracts can potentially accommodate RM3.8 billion worth of properties in the next few years, according to Iskandar.

He added that while Glomac’s primary focus will still be in the Klang Valley, the company is also scouting for regional opportunities.

He did not elaborate, only indicating that Glomac’s growth going forward, would be through organic and mergers and acquisitions. “It is a little bit of both,” Iskandar said.

Glomac ventured into its overseas foray in 2006 when the company acquired an office building in Melbourne, Australia for A$30.5 million (RM95.3 million). It was reported in 2007 that Glomac had also intended to undertake an estimated RM800 million mixed township development in Pune, India, under a joint venture with India-based developer Vescon. That has yet to materialise.

The property developer had on Sept 14 announced that it had sold its entire 49% stake in Thailand-based WHA Glomac Alliance Co Ltd, a warehousing and logistics entity, for RM30.92 million to WHA Corp Co Ltd. Glomac had invested in the foreign company in 2007.