GLOMAC: Robust Sequential Improvement Propels Developer’s Outlook, Target Price Raised

Performance Review

A leading property developer reported a core net profit of RM2.8 million for the first half of fiscal year 2026 (1HFY26), a performance that, while representing 17% of the full-year forecast, saw significant sequential improvement, suggesting a stronger operational footing. This outcome aligns with expectations for earnings to be heavily weighted towards the second half of the fiscal year, with substantial progress anticipated from the third quarter.

Despite a 37% year-on-year (YoY) contraction in revenue to RM81.8 million during 1HFY26 and a 78% YoY fall in core net profit – primarily due to planned construction phasing in 1QFY26 and lower initial contributions from new projects – the second quarter demonstrated a remarkable turnaround. The company recorded a net profit of RM4.2 million in 2QFY26, effectively reversing a RM1.7 million loss in 1QFY26 as project billings accelerated.

New property sales in 2QFY26 notably increased by 40% quarter-on-quarter (QoQ) to RM28 million, bringing 1HFY26 sales to RM48 million. Key drivers for sales included terrace houses at Serai@SBCR and shop offices at Saujana Perdana. Unbilled sales remained robust, easing marginally to RM558 million, providing a healthy 12-18 months of earnings visibility.

Future Outlook and Strategic Growth

Management is highly confident of a significant acceleration in earnings momentum throughout the second half of FY26. This optimistic outlook is backed by the normalisation of progress billings from ongoing flagship projects such as Lakeside Residences and Bandar Saujana Utama. Furthermore, maiden contributions are expected from newly launched landed residential developments, including Serai 2 @ SBCR, KEYS Phase 2A, and Allamanda Saujana KLIA. The strategic shift towards a higher-margin sales mix of landed and commercial products is anticipated to bolster gross profit margins above the 30% level.

Despite the 1HFY26 new sales figure of RM48 million, management projects total FY26 sales to be on par with the prior year’s RM332 million. This target is underpinned by a robust second-half launch pipeline with an estimated Gross Development Value (GDV) of RM250 million. Upcoming launches are strategically planned across key growth areas like SBCR, Lakeside Residences, Saujana Rawang, and Saujana Jaya, supported by proactive marketing efforts and consistent demand for landed homes.

The company continues to actively explore landbanking opportunities within the Klang Valley and Johor, focusing on strategic township extensions and quick-turnaround residential projects. With negligible net gearing of 0.01x, a strong cash position of RM229 million, and a RM3 billion Sukuk Wakalah Programme, the group is exceptionally well-positioned for accretive acquisitions. Its substantial remaining GDV of RM7 billion further underscores long-term development growth prospects.

Analyst View and Recommendation

Analysts maintain a positive view, citing the company’s strong sequential recovery and robust pipeline. The target price has been set at RM0.25, indicating a potential upside of 25.0% from the last traded price of RM0.20, with a BUY recommendation.