(Jan 25, RM1.83)
Reaffirm hold at RM1.80 with fair value under review: Glomac told with Bursa Malaysia yesterday that it is acquiring approximately 200 acres of leasehold land in Puchong for RM77 million or RM8.80 psf. The land is basically an extension to its present development called Lakeside Residences.
The development was a joint venture with the vendor/landowner on a 90-acre site where Phase 1 has been completed. However, subsequent phases of the development had to be put on hold following disputes between both parties.
Lakeside Residences is located behind Tesco hypermarket and near YTL Land & Development’s Lake Edge and Malton’s Mutiara Puchong developments. The development is accessible from the Damansara-Puchong, Kesas and Bukit Jalil highways.
The development, first launched in 2005, comprises 537 double-storey terrace houses — priced at RM325,000 to RM550,000 per unit — and 100 semi-detached houses with a total gross development value (GDV) of RM250 million to be done over five phases.
We are positive about this acquisition mainly because it would be net asset value (NAV) and earnings accretive. Glomac will now be able to take full control of the 90 acres under the earlier JV agreement and increase its land bank at the same location to 200 acres.
We estimate this development will be worth about RM1 billion in GDV, assuming 80% efficiency ratio and the terrace units sold at an average of RM500,000 each, which could potentially boost our NAV by 25%.
Going forward, Glomac’s earnings would be driven by strong unbilled sales of about RM600 million. The company will be launching over RM1 billion of new projects starting with serviced apartments in Glomac Damansara priced at RM600 to RM650 psf.
We reaffirm our “hold” rating with our fair value currently under review pending a meeting with the management. — AmResearch Sdn Bhd, Jan 25
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