I was looking for a property developer, who in my opinion would be best positioned to benefit from a recovery in property stocks. The criteria I was looking for is for the developer to:

1) Benefit from MRT projects

2) Sell low-medium (affordable) priced units and

3) Is overlooked by the market with M&A angle

GOB (1147) met my criteria.

Equine Park to get its own MRT station under the Sungai Buloh-Serdang-Putrajaya (MRT2) line

The company’s landbank is mainly located at Taman Equine which has not been revalued since 1994. With over 100 acres of landbank remaining, the company is able to continue developing and generating profits in the future.

Selling service apartment units with starting price of RM526k (890sq ft)

Just to take an example, one of its current projects, The Galleria 2 Equine Park is being marketed at RM526k for an 890sq ft unit. This is just slightly over Malaysia’s definition of affordable (low cost) housing of between RM300k-RM500k. In addition, GOB’s projects are have swimming pool, 2 parking units and all the bells and whistles.

Earnings recovery and stronger balance sheet after selling Da Men

After recording a few quarters of losses due to the very soft property market, the company is starting to record consistent profits. Balance sheet is also much stronger after disposing Da Men to Pavilion Reit. The company has net debt of RM26.3m only which is a gearing ratio of 5% only

The company has not been receiving much attention compared to Malton or WCT (same boss in billionaire Desmond Lim)

Malton's share price has doubled since the start of 2017 and is now trading 0.8x its NTA while GOB is only trading at 0.435x. Since they have the same boss with a potential merger between the companies, GOB’s discount should narrow. GOB, if traded at 0.8x NTA (similar to Malton), should be trading at RM0.80 instead of only RM0.435 now.