KUCHING: Glomac Bhd (Glomac) is set to retain its robust growth momentum, driven by the group’s record unbilled sales and increasing launches line up in the financial year 2013 (FY13).
According to the research arm of TA Securities Holdings Bhd (TA Securities) in a recent report, Glomac came within the research firm and consensus’ estimates, reporting a net profit for the first half of the financial year 2013 (1HFY13) at RM44.9 million.
“1HFY13 net profit surged by 27.8 per cent year-on-year on the back of a 9.2 per cent growth in revenue,” the research firm said.
Glomac’s commendable growth in net profit was mainly attributed to the group’s improvement in pre-tax margin (an increase of 0.8 per cent points year-on-year) on account of favourable product mix and lower minority interest following the completion of the 51 per cent owned Glomac Tower in the fourth quarter of the financial year 2012 (4QFY12), while on-going projects such as Glomac Damansara, contributed to the group’s revenue.
Sequentially, the research firm noted, “Despite a 22.8 per cent drop in revenue to RM124.4 million in 2QFY13, net profit grew at an impressive rate of 13.9 per cent to RM23.9 million.”
Meanwhile, the research firm highlighted Glomac’s RM171 million new sales in 2QFY12 which brought the group’s year to date new sales to RM383 miilion, a growth of 81 per cent year-on-year.
“We attribute the strong sales momentum to its favourable product mix which comprises bread and butter township projects as well as high rise and commercial projects located at prime areas,” TA Securities said.
Commenting further on the group’s commendable sales performance, the research firm added, “Unbilled sales were at all time high of RM835 million as at October 2012.”
Additionally, Glomac’s on-going township projects such as Bandar Saujana Utama and Saujana Rawang continued to provide consistent monthly sales of RM10 to 15 million, collectively contributing more than 50 per cent to the group’s total 2QFY13 sales.
Looking ahead, the research firm expected both townships projects would command higher margin as common infrastructure costs have substantially spent during the early stage of the development.
Driven by record unbilled sales of RM835 million and more than RM1.1 billion worth of project launches in FY13, TA Securities placed Glomac well in line with achieving its double digit earnings growth target.
As such, the research firm pegged the group’s target price at RM0.98 per share, based on free cash flow to equity.