Author: Patrick TheBull   |   Latest post: Mon, 25 Nov 2019, 10:32 AM


GOB - Something is brewing?

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Image result for GOB annual report

Global Oriental Berhad (Main Market, Property)

Share price: RM 0.215

Market cap: RM 98 mil

Shares: 454 mil

NTA: RM 0.62

Global Oriental Berhad (GOB), an investment holding company, is engaged in the development of residential and commercial properties in Malaysia. Its activities also include the sale of land and rental of properties. The company develops various commercial and residential products, such as bungalows, bungalow plots, townhouses, terrace houses, apartments, shops, parks and offices. GOB is also involved in recreational and equestrian activities. The company was founded in 1992 and was earlier known as Equine Capital. It is based in Seri Kembangan, Malaysia.

Today, I was sharing this counter because I believe the market had underlooked GOB, yet Dato' Choo Chuo Siong see it as an opportunity. Just a brief intro about him, he was graduated from London School of Economics & Political Science and currently holding position as Managing Director & Director at Xiao En Group and Council Member at Best Wishes Foundation. He is also Council Member at Inxo Arts & Culture L Foundation and on the board of 5 other companies which including Pavillion REIT. Since July 2019, he had consistently accumulating GOB shares from the open market. As now, he is holding a sum of 9.02% or 40.98mil units of GOB shares (including 7.93% of indirect interest)

On top of that, we can see GOB post its first ever net profit after 7 consecutive quarter losses for their most recent QR in August 2019. Do note that, the QR released on August 2019 was the 1st quarter performance for FY 2020. I am also expecting an improved QoQ result for the coming QR which will be released later on this month.

During FY2019, no new property project was launched except for the introduction of new phases such as Galleria 2 and Villa heights 2 in Seri Kembangan and Phase 2 of the ongoing Pavillion Embassy project comprising two residential tower blocks. For FY2019, the Pavillion Embassy contributed 76.3% or RM 94.7 million to the property development division's revenue and the remaining came from the projects located in Seri Kembangan. Currently, the Group has about 500 acres of land bank for development (including those under joint ventures). Notwithstanding the challenges faced in the property sector, the Group would continue its efforts to enhance their land bank via strategic tie ups or joint ventures with land owners and/ or through acquisition. As at 31 March 2019, the Group had a healthy total unbilled sales of approximately RM655.0 million from ongoing projects. 

Upcoming Projects:

Manjung Warisan, Lumut Perak would be the Group's first development project in Perak via a joint venture with Menteri Besar Incorporated Perak. It is located near to the famous Foochow town of Sitiawan, the thriving commercial hub of Manjung point, Perak's port to international waters, Malaysia's largest Royal Navy Base, and the gateway to the famous Pangkor Island and Marina Island. The Group are expecting to launch the 1st phase of this development in 2020 based on their recent positive pre-registration exercise. The mixed development project is estimated with a gross development value (GDV) of RM 900 million.

In this section, I will show u what I saw and anticipated via technical analysis.

First, an inverted head and shoulder was formed in the property indices. It is a bottom pattern that usually signals a change in price trend and when it occurs the price of shares/ index/ indices is likely to move against the previous downtrend. Second, the indices was trending upward since end of Oct, 2019. I believe it was brought up by UEMS, Simeprop and SPSetia. The following resistance level is at 792.3, 797.5, 802, 807 points. Third, GOB's share price had broke out from downtrend, whether you are refering to daily, weekly or monthly chart. It also breakout from the first 2 horizontal resistance level, RM 0.20 and 0.205. The following resistance level was mentioned in last of the following figure, please do take note. Next, MACD divergence was formed, also, the MACD had crossed above the signal line and closed with positive value. No matter you use which indicators, i.e. Bollinger Band, Ichimoku, MA/EMA, MA envelope, MFI, OBV, RSI, Stochastic or Parabolic stop and reversal also indicating a strong bull is unleashing. 

Property Indices Performance

GOB 's monthly chart

GOB's weekly chart

One of the interesting fact is that GOB is teaming up with companies linked to Tan Sri Desmond Lim. It is not a new thing. In 2015, GOB sold Da:men retail mall to Desmond's PAVREIT. In June 2017, GOB JV with Malton for a mixed-use development on 38.34 acres of freehold land in Cheras. Yet another project tie-up between Desmond and GOB is the Pavilion Embassy project in Jalan Ampang. Not only that, Dato' Choo, who was one of the board members in PAVREIT, are accumulating GOB shares since July 2019. Also, The Pavilion Genting Highlands project is being developed by Sering Manis Sdn Bhd, which is majority owned by GOB (51%). Anyhow, It is unclear if Desmond Lim has a direct link to GOB, although it has been widely reported that he works behind the scenes at GOB.

Besides, the upcoming MRT2, also known as the Sungai Buloh-Serdang-Putrajaya line, will see six stations in the vicinity — Serdang Raya North, Serdang Raya South, UPM, Equine Park and Taman Putra Permai. The upcoming MRT2 which expected to be operational by July 2021 (Phase 1) and July 2022 (Phase 2), will help ease the traffic congestion in Seri Kembangan — one of the biggest grouses of the residents. Developers and residents are also looking forward to the completion of these stations, which will serve as an alternative mode of transport from Seri Kembangan to Kuala Lumpur, Cyberjaya, Putrajaya and other places. Do note that, with the MRT2, land values and developments close to any rail network station tend to appreciate. Areas close to the stations will be able to accommodate high density developments and transit-oriented development and these properties will not only see capital appreciation but also higher yield or rental increase. Upcoming developments close to the planned MRT stations are The Atmosphere by Tempo Properties Sdn Bhd, Galleria by Global Oriental Bhd, Astetica Residences by Hua Yang Bhd, Equine Residence by Beverly Group, Sfera Residency by YNH Property Bhd and Meta City by Villamas Group.

Just to keep it short and simple. GOB, currently trading at big discount to its NTA of RM 0.62. Also, with the recent shares accumulation by Dato' Choo and how the price react recently, I believe the worst had passed and something is brewing in this company, now.

Disclaimers: This is not a buy call or a sell call, please do your own due diligence before performing any decision. Feel free to drop me a message at patrick.thebull6@gmail.com, we can have some conversations or information sharing regarding to GOB.

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