KUCHING: AmInvestment Bank Bhd (AmInvestment Bank) continues to hold a positive stance on on Glomac Bhd (Glomac) despite it reporting lower than expected earnings.

In a company report by AmInvestment Bank, it was reported that the property developer posted a core net profit (CNP) of RM22 million for the first nine months of financial year 2023 (9MFY23). This excluded a one-off waiver fee of RM4 million which was incurred from releasing Bumi lots to non-Bumi buyers.

According to the bank, this was below expectations as it only made up 61 per cent of their earlier estimated net profit and 58 per cent of overall analyst projected earnings.

The bank mused that this was mainly due slower construction progress from labour shortages causing the lower than expected revenue.

“In addition, its FY23 forecasted planned launches that were initially scheduled to be launched in 2Q-3QFY23 have been postponed to 4QFY23,” AmInvestment Bank added.

In response to this development, the bank guided that it would be lowering their forecasted FY23 CNP by 15 per cent to account for the slower progress billing and deferment of new launches.

And for the next quarter (4QFY23), AmInvestment Bank believes that the group’s sales will be supported by its planned launches on high-demand affordable housing with average prices per unit of RM320,000 in GreenTec Puchong and RM530,000 – RM603,000 for its doublestorey terrace housing in Saujana KLIA.

“We believe Glomac is able to register commendable sales for its new launches in Saujana KLIA driven by the overwhelming demand for the existing project, which have a take-up rate of 99 per cent.

“Meanwhile, we are positive on the sales prospect for GreenTec as it is adjacent to the group’s existing Lakeside Residences project in Puchong, which are already fully sold.”

Despite the lowering of Glomac’s forecasted CNP in FY23, AmInvestment Bank shared that they continued to like the stock’s long-term outlook as it was underpinned by its property offerings with attractive pricing, its township developments and higher forecasted FY24 earnings.

It made no changes to their forecasted CNP for FY24 and FY25 as they expect labour shortages to ease while the developer’s targeted launches to proceed with no immediate headwinds.

AmInvestment Bank maintains its ‘Buy’ recommendation on Glomac with an unchanged fair value of RM0.37.