Glomac - FY11 results: scaling new highs (HLIB)

Price Target: RM 2.57

Share price: RM 1.80

Results  FY11 net profit rose 54% yoy to RM63.0m, and was inline with our net profit forecast of RM66.9m, but 9% ahead of consensus.

Deviations

 FY11 revenue came in at RM601.5m which was 11% higher than our estimates and 12% higher than consensus, mainly due to faster than expected progress for Glomac Tower.

Dividends:

 Gross dividend of 5.0 sen (less 25% tax) declared in Q4, bringing full year gross dividend to 9.5 sen.

Highlights

 Sales rose 24% yoy to RM418m, driven by Glomac Damansara, Saujana Utama and Saujana Rawang (excluding the en bloc sale to Tabung Haji in FY10).

 This in turn helped unbilled sales rise from RM500m to RM550m (0.94x FY11 property development revenue).

 Property margin remains stable at 23%.

 The RM1bn Glomac Puchong (200 acres) will be the group's new flagship project after Glomac Damansara.

 Proposed 2-for-1 share split, to be completed by Q4.

Risks:

 Slower than expected sales; project execution risks.

Forecasts:

 We have raised our earnings forecast by 21-27% for FY12-13, in anticipation of strong take up rates from RM1.2bn worth of launches in FY12. This is further supported by RM550m of unbilled sales.

 Management is guiding for 30% earnings growth for FY12-13. We estimate 31% growth for FY12 but only 17% for FY13 as we have not factored in sales from Glomac Puchong (GDV: RM1bn) and Plaza Kelana Jaya Phase 4 (GDV: RM280m).

Rating:

 BUY

 Positives: (1) Strong land-banking, branding and execution track record. (2) Undemanding valuations – single-digit P/E and 44% discount to our RNAV estimate. (3) 4.4% dividend yield is also attractive.

 Negatives: Lack of liquidity / free float.

Valuation:

 After rolling over our numbers and upgrading our earnings outlook, we raise RNAV by 7% to RM3.22.

 Our target price, which is based on an unchanged 20% discount to RNAV, is also raised by 7% to RM2.57.