The fair value is arrived at after applying a discount of 20 per cent to its revised estimated net asset value of RM1.74 per share.
"While demand for residential units should pick up from an expected growth in income and robust buying sentiment, we are neutral on Glomac's planned residential launches for fiscal 2010, which accounts for 36 per cent of planned gross development value this year," the stockbroker said in a March 23 report.
"This is mainly because its launches are not appealing, although modest pricing could entice first time buyers and those from a lower income segment," it added.
However, Glomac's shift to commercial development is showing positive results, it noted. AmResearch was somewhat surprised by the strong sales for the developer's commercial venture in Cyberjaya, which has an estimated GDV of RM205 million. While phase 1 of the project has a 70 per cent take-up, phase 2 was sold out.
Likewise, Glomac Damansara was well received despite a glut in supply of retail and commercial space within the vicinity.
"Given Glomac's knack in securing en-bloc sales for its buildings, we are not ruling out more such deals. It is looking to sell a few more buildings at Glomac Damansara with enquiries for its corporate tower in Plaza KJ4," the report said.
By Business Times
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