• Business profile. GOB (formerly known as Equine Capital Berhad) was listed on the Main Market in Oct 03. Taman Equine, Putra Permai and Pusat Bandar Putra Permai are the Group’s landmark towns hip development projects in Seri Kembangan which began in the 1990s. Spanning over 789 acres of leasehold land in Seri Kembangan, these developments are strategically connected to the Damansara-Puchong Expressway, Bukit Jalil Highway, South Klang Valley Expressway and Seremban Highway. The connectivity would be further improved by the proposed Serdang-Kinrara-Putrajaya Expressway (“SKIP”) and also by the proposed Seri Kembangan interchange of Maju Expressway (“MEX”) which is currently under cons truction.
• Its ongoing projects in Seri Kembangan are Villa Heights (a guarded and gated residential project), Springville (a low-density full condominium) and Galleria (an exclusive service apartment project) as well as an integrated development with retail shopping mall in USJ, Subang Jaya. The group is also involved in the trading and distribution of housewares and related products (acquired in 2015) such as glass and ceramic dinnerware, cookware, tableware and others.

• Major medium to long term projects in the pipeline (likely to kick start in 2017/2018 depending on market condition) are (1) the joint development agreement (JDA) with Lembaga Getah Malaysia for the development of ~RM900m mixed use projects in a 5.8 acres landbank in Jalan Ampang and Jalan Ampang Hilir and; (2) the development of commercial and residential project with Menteri Besar Incorporated Perak in a parcel of land measuring approximately 147.84 acres located in Lumut for a GDV over RM900m (for a period of 10 years).
• Strong netcash of RM292m or 64sen/share (26.7% higher than current market price!). Following the disposals of (1) 51% equity interest in Penaga Pesona (which undertakes tow nship development project of Crescentia Park in Batu Kawan) for RM41m (completed on 5 Feb 16); and (2) a 5-storey shopping mall with a lower ground floor known as “da:men USJ” together with 1,672 car park bays for RM486m to Pavilion REIT (completed on 25 Mar 16), GOB has transformed into a netcash company with RM292m or 64sen/share from netdebt of RM236m as at 9MFY16. The solid financial position should rerate share prices higher as it provides an excellent war chest for the group to ride through ongoing property sector uncertainty. At RM0.505, GOB is trading at 0.48x P/B, about 44% discount against its peers.
• Poised to retest RM0.58-0.605 zones after a brief sideways consolidation following a bullish breakout. Recently, GOB staged a bullish downtrend line breakout (FIG1) and positive triangle breakout (FIG2) as share prices surged 6.4% WoW to end at RM0.505 yesterday, supported by upticks in technical oscillators (daily and weekly) and huge volume of 3.9m shares (160% and 129% higher against 1-month & 3-month average).
• We believe current rally still has legs and share prices are poised to break the immediate neckline resistance of RM0.525 (23 Feb high) soon. A decisive breakout above RM0.525 will spur prices higher to test RM0.58 (61.8% FR) and our long term price target of RM0.605 psychological barrier.
• On the flip side, after a strong weekly run, share prices may turn sideways if the RM0.525 mark cannot be surpassed. Key supports are RM0.485 (10-d SMA) and RM0.47 (30-d SMA). Cut loss at RM0.465.
• Attractive risk to reward ratio with 18.8% upside against 7.9% downside. We see a good risk to reward ratio for investor with a theoretical entry price of RM0.505 given that the downside to the cut loss zone of RM0.465 is 4 sen (-7.9%) while the upside to the LT target of RM0.60 is 9.5 sen (+18.8%).

Source: Hong Leong Investment Bank Research - 5 Apr 2016