With extreme inflation rates in place, investors should be eyeing for more-than-average returns in order to justify the diminishing real rate of return.
Hence, chasing after high returns are no longer the strategy for risk-taker type of investors, but it should be the general investment strategy for all wise investors as a whole.
Now alongside with the election in place, the blue chips and the construction sector are experiencing high fund inflow as investors are expected better return from the said sectors.
Generally, construction sector is generally perceived as a “low margin” industry due to their high unpredictability, cash flow constrains that lead to lower margin, as well as exposure to increment of building material prices.
Hence the lower valuation, single digit price-to-earnings of for the companies as a whole.
However, there was one company that stands above all.
Formally known as G Neptune Berhad, Southern Score Builders Berhad (SSB8) had now gained the shareholders’ approval for their injection of assets into the company. This is not just another Reverse Takeover, but it is a very interesting one instead.
Investors could find the excerpt of the audited accounts of the company to have a reference on their margins. As you can see, SSB8 is enjoying double digit margins where the some of the peers are now suffering in losses or in low single digit margins.
As G Neptune Berhad was previously in ACE market, it is only fair for us to take other listed construction peers in the ACE market as comparison. As you can see, apart from WIDAD who enjoyed higher than average margin premium, the rest of the companies are generally in losses or are having less than 5.0% profit after tax margin.
In fact, SSB8’s business model should be considered as sub-property developer due to their low involvement in direct labour, material handling as a project managing company. With a low listing price at 20 cents, investors should take this opportunity to initiate a BUY position to gather some of the shares of SSB8, due to the factors aforementioned.
This is excluding the fact where the major shareholders of SSB8 are also the key person for the mega property developer, Platinum Victory.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
