ECM Libra Research has reiterated a buy on GLOMAC BHD [ GLOMAC  0.930  -0.010 (-1.064%) ] at 80 sen with an unchanged target price of RM1.25, after a key shareholder said the company is open to a takeover bid.

“Tan Sri Mohamed Mansor (Fateh Din)’s comment that Glomac may be a takeover target is not surprising considering that the company is trading at a steep discount to its net worth,” ECM Libra said in a note yesterday.

Based on Monday’s closing price 80 sen, Glomac was trading at a 57% discount to its net tangible asset per share (NTA) of RM1.85 as of April 30, 2009, the research house said.

However, any potential buyer “may also have to buy out other major shareholders’ stakes in the company”, ECM Libra said, noting that Glomac’s founding members — Mohamed Mansor, Datuk Richard Fong and Datuk Fateh Iskandar — collectively own 57.9% of the company.

The research house values the founding member’s 57.9% block at RM318 million, assuming that an offer price is tagged at the company’s NTA of RM1.85 a share. Its RM1.25 target price for the stock is based on 10 times FY2010 earnings.

Nonetheless, it said that Glomac was attractive not only at current valuations on a net asset basis, it also has landbank located in prime areas. Glomac is developing a grade A office building in the Golden Triangle, Glomac Tower, and also owns various parcels of prime commercial land in the Klang Valley.

“While sales have tumbled, there are nascent signs of recovery. Unbilled sales of RM364 million will underpin earnings in the near term.

“More importantly, the company has pared down its borrowings, and net debt-to-equity ratio has declined to 0.12 time currently from 0.73 time in FY07,” ECM Libra said.

Glomac gained 6.5 sen to close at 86.5 sen yesterday.