Glomac surges to three-year high as investors bet on better days ahead after below-view 3Q

• Glomac’s net profit jumped by over 800% to RM3.81 million for its third quarter ended Jan 31, 2024 (3QFY2024) from RM419,000 a year earlier, driven by higher revenue from its property development and property investment businesses.

KUALA LUMPUR (March 27): Shares of Glomac Bhd surged to its highest in three years, as investors and analysts bet on better sales and margins ahead, even after the property developer reported weaker-than-expected results.

Glomac climbed as much as 9.5% or 3.5 sen to 40.5 sen in early Wednesday morning trade, its highest since March 2021. At noon market break, the stock pared some of its gains but was still up by 2.70% at 38 sen, valuing the company at RM299.81 million after nearly five million shares exchanged hands.

“We anticipate sales to improve” in the fourth quarter of its (Glomac’s) financial year ending April 30 (4QFY2024), contributed by the launch of two new projects in January 2024, with a combined gross development value of RM269 million, said AmInvestment Bank.

AmInvestment, one of only three houses covering Glomac, retained its “buy” call on the stock, even as the company’s nine-month core net profit of RM9 million only accounted for 55% of analysts’ full-year estimate.

Shares of Glomac have remained largely flat year-to-date before the results were announced, lagging sector peers that have surged ahead, as the company grappled with decline in earnings and lower sales.

In contrast, Bursa Malaysia Property Index, which tracks 97 developers, have racked up a 17% gain so far this year, as concerns over the supply glut ease, while investors bet on growing demand for homes.

“We see better new sales prospects for Glomac, as the launch of Loop Residence and projects at its existing township should sustain new sales growth,” said MIDF Amanah Investment Bank, which also maintained its “buy” call on the stock.

Further, the balance sheet of Glomac remains “sturdy” with low net gearing, while valuation is “undemanding”, trading at a 76% discount to the latest net tangible assets, the research house noted.

Glomac’s net profit jumped by over 800% to RM3.81 million for its third quarter ended Jan 31, 2024 (3QFY2024) from RM419,000 a year earlier, driven by higher revenue from its property development and property investment businesses.

Quarterly revenue had increased 35.38% to RM89.35 million in 3QFY2024, from RM66 million the previous year.

However, for the first nine months of FY2024 (9MFY2024), Glomac’s net profit was down 52% to RM8.36 million, from RM17.41 million in the same period of FY2023, amid lower contributions from the property development segment and higher finance costs.

Nine-month revenue slipped 2.22% to RM205.26 million, from RM209.93 million in 9MFY2023.

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