Glomac flies high, going higher on stronger sales

There are signs of an upward momentum for property developer Glomac Bhd as it broke out of its month-long triangle consolidation recently.

Higher trading volume also sent prices up to close at its multi-year high of 44 sen.

On the upside, prices may move towards the historical resistances at 44 sen followed by 48 sen next.

The counter was trading at a 52-week low of 30 sen last June.

In the past year, Glomac has climbed some 37.1% to close at 42 sen on May 24.

As it is, investors like Glomac for its long-term outlook bound by attractively -priced products.

This can be seen with strong average take-up rates of 94% for existing projects.

Furthermore, Glomac’s focus is on township developments in Selangor, which has the largest population in Malaysia with robust housing demand.

It is not anticipated to see any significantly more exciting or aggressive launches for Glomac in FY25.

This is because the property developer will stay focused on its new high-rise project, Loop City Residence.

It also has new phases in its existing matured townships, namely Lakeside Residences and Saujana KLIA.

That said, upside surprise could arise from stronger- than-expected demand for Loop City Residence, potentially accelerating launches in subsequent phases of the township.

Total GDV of Loop City Residence is huge, amounting to RM1.6 billion.

Currently, Glomac has 8 ongoing projects with total unbilled sales of RM347 million.

The unbilled sales of RM123 million from 121 Residence are expected to be recognised in 4QFY24 or 1QFY25, as the project nears completion.

Nevertheless, it was a disappointing 9MFY24 for Glomac as it only chalked in sales totaling RM142 million,

This was only 36% of Glomac’s FY24 sales target of RM393 million.

However, Glomac remains optimistic on surpassing FY23 sales of RM302 million.

The company believed buying momentum remained positive based on sales data observed during February-March 2024.

Glomac aims to secure at least RM160 million sales from the 2 projects launched in 4QFY24 with a combined GDV of RM269 million.

In 3QFY24, Glomac has a low net gearing ratio of 0.08x (from 0.10x in 2QFY24), which provides sufficient room to gear up for future value-accretive land acquisitions.

Glomac is currently looking for potential land acquisitions in the Klang Valley for development of either pocket-sized projects or township developments.

Overall, Glomac looks attractive given its high price to book value of 0.2x versus its peers, which typically have P/BV ranging from 0.5x to 0.7x.

The high book value is mainly attributed to its huge land bank with a remaining GDV of RM7.6bil in Selangor and Johor, which represents 21x FY25 revenue.

The steep discount can be partly due to limited launches since FY21 , leading to declines in both revenue and earnings.

However, improving launches could serve as a catalyst for the company to garner investors interest.