We  value  GOB  at  MYR1.35,  at  50%  discount  to  RNAV.  Its  current valuations are undemanding at a 5.5x P/E and 0.7x P/BV. After a change of management in 2009, GOB’s earnings turned around from FY12 as a result  of  enhancements  in  the  design  of  its  property  products.  Its remaining 350 acres of leasehold land at Batu Kawan is a jewel, allowing it to tap on the long-term growth prospects on Penang’s mainland.

- The  change  since  2009.  Equine  Capital  changed  its  name  to  Global Oriental in Sept 2012. The previous shareholders and management were gradually removed after Equine’s former executive chairman disposed of his  29%  stake  to  GOB’s current executive director,  exiting  the  company after  the  12th General  Election.  Since then, GOB’s property products have seen significant design and concept enhancements. The company’s recent  project  launches  have  been  highly  successful,  with  units  at da:men in USJ and Springville Residence at Equine Park > 90% sold.

- A  jewel  in  350  acres  of  land  in  Batu  Kawan.  This  350  acres  of  land GOB owns in Bandar Cassia Batu Kawan is worth a gross development value  (GDV)  of  MYR2.3bn.  The  land  is  very  near  to  the  exit  of  the Penang Second Bridge. As more multinationals set up their plants in Batu Kawan  Industrial  Park,  the  demand  for  residential  properties  on  Penang mainland  has  risen  as  job  opportunities  also  increased.  The  recent launch  of  Callisia  2  has  been  fully  taken  up,  while  the  next  phase  is slated for launch in December this year.  

- Tail-end  development  at  flagship  Taman  Equine.  Over  the  next  two years,  GOB  is  expected  to  complete  the  development  of  its  flagship Taman Equine on the remaining 80 acres of land. GOB plans to put up a community  mall  next  to  the  existing  AEON  mall.  Also  in  the  pipeline are the  launches  of  some  condos/SOHO  units,  semi-Ds  and  bungalows,  as well as some bungalow land plots.

- JV  with  Lembaga  Getah  Malaysia  (LGM).  GOB  has  also  tied  up  with LGM  to  develop  a mixed  development  project  with a  GDV of  MYR900m along Jalan Ampang. GOB plans to roll out the residential component in mid-2014.  

- Fair  value  at  MYR1.35.  We  value  GOB  at  MYR1.35,  based  on  a  50% discount  to  RNAV.  We  believe  the  stock  will  gradually  garner  more investor interest as GOB builds up an earnings delivery record.   

Source: RHB