1. Share Price Retracement
Gadang reported a weak set of result on 25 October 2017. Since then, share price has retraced from RM1.28 to RM1.07.
Despite the set back, analysts are still positive about the stock. JF Apex and RHB Investment Bank expect earning to normalise in subsequent quarters, with EPS around 15 sen for FY2018.
(Source : JF Apex Securities)
(Source : RHB Investment Bank)
Based on existing price of RM1.07, Gadang looked undervalued, trading at prospective PER of merely 7.1 times.
Curious about the stock, I decided to take a closer look. What I found was interesting : there might be further upside to the analysts' earning forecast for 2018. The company still has huge earning coming in from its Capital 21 project in Johor.
2. Update On Capital 21
According to forum member Ricky Kiat who attended Gadang's AGM on 8 November 2017, there is still RM260 mil revenue to be booked in from Capital 21. The Capital 21 land cost is only RM31 mil. Based on assumption of 25% tax, the project will contribute RM171 mil to net profit going forward.
Unknown to many people, the Capital 21 Project has been listed on Singapore's Catalist (equivalent to malaysia's ACE Market) in May 2017 :
(Source : www.sgx.com)
Please click on the following link for Capital World's latest quarterly report and corporate presentation :-
Capital World has been reporting decent profit since FY2015 :-
(Source : Capital World's corporate presentation for September 2017 quarterly report)
Actually, I am not so interested in how well Capital World is doing. What interests me is that the Capital 21 project is progressing well. This is because if the Capital 21 project is doing well, Gadang will get paid.
Perhaps the most interesting information from the September 2017 quarterly report is that Capital 21 is currently in Interior Design stage and targets to open in 2018.
(Source : Capital World's corporate presentation for September 2017 quarterly report)
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Gadang ah.you talk more stories and goreng a bit maybe can go up a while I guess. Long-term order book leh?
2017-12-29 14:15
Construction order book is about RM2b. Can last for 3 to 3.5 years. Expecting about RM0.5b new contract per p.a..
Properties will do well next few years with RM3-4b GDV (growing) - like Scientex, properties is trading at PE of 7x (with PAT of RM260m for property segment - double the size of manufacturing). Capital 21 will bring in cash flow of about RM200m, next two to three years.
Next 3 years average PAT p.a. is about RM130m. Market Cap today is RM730m @ RM1.11. Prospective PE is only about 5.6X. Undervalue. Accumulate.
2017-12-29 17:56
Flintstones
If you do a proper DCF on gadang orderbook and proceeds from the properties division, the current price is about right
2017-12-28 14:34