GLOMAC: Property Developer Faces Sales Challenges, Rating Downgraded to Hold

Financial analysts have adopted a more cautious stance on a property developer following recent meetings with management, citing a likely longer path to earnings recovery and patchy sales momentum. The investment bank TA Securities has downgraded the stock to a “Hold” rating from “Buy,” revising its target price downwards to RM0.33 from RM0.40, based on a 0.21x CY26 Price/Book multiple.

Performance Review

The property developer recorded a core net loss of RM1.7 million in the first quarter of financial year 2026 (1QFY26), a significant reversal from the core net profit of RM7.3 million in 1QFY25 and RM2.4 million in 4QFY25. This weaker performance is primarily attributed to lower construction activities, with ongoing project phases still in the early stages of recognition. Management acknowledged these challenges and stated that measures are being implemented to accelerate progress, including the award of new contracts to kick-start projects. Unbilled sales stood at RM566 million, representing 2.7 times FY25 property development revenue, offering earnings visibility for the next 12-18 months. However, a more meaningful recovery is anticipated only from 3QFY26 onwards.

Sales Target Appears Ambitious

The property developer secured only RM20 million in new sales during 1QFY26, a slow start against its ambitious full-year target of RM400 million. The report highlights an uneven demand landscape across its developments. While one project, Serai @ Sungai Buloh Country Resort (previously Saujana Utama 5) launched in October 2024 has fully sold out, Serai 2 (launched May 2025) has achieved only a 39% take-up rate. Similarly, take rates for Saujana KLIA (27%) and Saujana Jaya, Kulai (11%) are well below the company’s historical benchmark of approximately 70% within six months of launch.

Management has initiated remedial actions, including revamping its Johor sales team, engaging third-party sales agents, and accelerating site progress to boost buyer confidence. Despite these efforts, stronger traction is expected only from 3QFY26. Consequently, TA Securities forecasts flat sales of RM330 million for FY26, broadly in line with FY25’s RM332 million, down from previous assumptions.

Challenges and Future Outlook

The Loop City Residences project, with a Gross Development Value (GDV) of RM340 million, is viewed as a potential wildcard. However, its take-up rate remains stagnant at approximately 9% over a year since its April 2024 launch. This reflects limited market acceptance for its smaller units, which are less appealing to family buyers and face intense competition in Puchong’s high-rise market. Analysts remain cautious, believing Loop City is unlikely to contribute significantly in the near term, with more meaningful contributions potentially from FY27 if execution improves.

While management aims to ramp up annual launches to RM700-800 million from FY27 and actively explore land acquisitions in Klang Valley and Johor, progress on landbanking has been limited. The group’s balance sheet remains healthy with a net cash position of RM8 million, but near-term focus will likely be on executing existing projects.

TA Securities has revised down its sales assumptions for FY26/27/28 by 13%/8%/10% to RM330mn/RM350mn/RM380mn, respectively. This adjustment reflects slower-than-expected launches and weaker-than-anticipated sales momentum, leading to cuts in earnings forecasts by 24%/28%/21% for the same periods.