SOS Read this before you INVEST in Stocks
SOS Is Gadang still a gem at RM3.10? Part 3
sosfinance
Publish date: Thu, 20 Oct 2016, 06:44 PM
sosfinance
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VALUATION DOES NOT DETERMINE THE PRICE, IT'S JUST A TOOL TO ESTIMATE A VALUE OF A BIZ
www.sosfinancialplanning.blogspot.my
"How do you save RM50,000? - I shared with a friend on how to do it. I got a term life for RM280 p.a covering RM100k until 70 years old. I cancelled my wholelife insurance of RM2,800 p.a. for the same coverage up to 100 years old. Save RM2500 p.a x 20 years = RM50,000. (PM0122037325)
.....IS THIS ARTICLE FAKE OR FACT?? ANYONE CAN CONFIRM?
www.sosfinancialplanning.blogspot.my
"How do you save RM50,000? - I shared with a friend on how to do it. I got a term life for RM280 p.a covering RM100k until 70 years old. I cancelled my wholelife insurance of RM2,800 p.a. for the same coverage up to 100 years old. Save RM2500 p.a x 20 years = RM50,000. (PM0122037325)
.....IS THIS ARTICLE FAKE OR FACT?? ANYONE CAN CONFIRM?
WHAT ANALYST SAID (REFERENCE)
RHB Analyst on 18 Oct 2016
TP: RM3.50 (from RM3.10)
Reason: Solid earnings visibility & undemanding valuation
After taken into consideration of Kwasa Land and Multiple Proposals and Proposed Dividend of 7 sen.
WHAT IS HAPPENING?
Construction order book: RM656 million
Unbilled sales: RM232 million
Kwasa Land: Awaiting detail agreement (Kwasa Land portion is RM165m, Gadang taking the developer responsibility)
Multiple Proposals: Positive event
MRT2: Likely, as announced by CEO of MRT.
Capital City 21: Gadang only provide land, and its share of profit is 16.7% of GDV. Gadang does not take up responsibility of a developer.
WHY SO HOT LATELY?
Multiple reasons. Some are fundamental reasons and some are sentiment reasons.
INFORMATION ONLY
Largest portfolio for Mr Fong Siling with 5m shares. At RM3.10 today, his market value is about RM16m. Most of his investments' market value is below RM5m. Mr Fong always does his homework. Of course, that does not mean he is 100% right. The fact that he is in the Top 30 list of shareholders, only gave some confident but not assurance (because we do not know when is he selling).
WHAT MY FUND MANAGER SAID
They bought in below RM1.50 and I believe they took up the PP at RM1.85. Nothing wrong if they trim a bit of its shareholding. Of course, I don't always listen to them. They talk about how great is Kossan, but they never kept that long.
ARE YOU WORRIED IF DIRECTOR SELLING?
1. Tan Sri sold 5,500,000 shares @ RM2.90 in Sep.
2. Another director sold about 50,000 (he has about 300,000+ shares)
3. I suggest, those who wants to know, ask them during the coming EGM, 3 Nov 2016, I think.
4. However, I did see a trend of Tan Sri selling and buying over the years. Not sure his "intention" but I believe, he will not harm his own company as he is the largest shareholder. Perhaps, someone's birthday around the corner.
5. So, if worry, don't touch it. What is the point of buying something and worry being "cheated"
WHAT DO I THINK?
1. 9MW Hydro Electric - Investment is about RM80m, contributing in FY2019
2. They have 4 water concessionnaires - invested about RM70m, contributing and increasing capacity
3. Plantation, in Sabah - one of the analyst gave a DCF of about RM41m (EV of USD7,500 x 3.80 x area) - fully paid.
4. Construction: RM656m, 1.5x visibility (before Kwasa Land deal), likely get MRT2, hopefully KVLRT3, etc
5. Property: Unbilled sales RM323m, 1.5x visibility (before Kwasa Land), Updated GDV: about RM6 billion (some of its property are landed, some are JV (so less holding cost), some are affordable homes.
6. Again, the horizon I looked at is about 2-3 years, unlike analyst only 1 year. I believe they can achieve average next 3 years at about RM110m.
7. I normally use rule of thumb. Sometime, my thumb does get burned. Sometime I look at how much capital they have invested, do a 6-8 year payback period, then calculate the DCF roughly. Of course, I also see their profit margin.
8. I will give it a PE of 7-14 for the range for 1-3 years. So, analyst view of PE10x, not very extreme.
DOES IT PASS YOUR OWN CHECKLIST WITH FLYING COLOURS?
1. Financials
2. Management
3. Business Model (competitive advantage)
Part 4 will be coming. After "visiting the management".
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Discussions
6 people like this. Showing 47 of 47 comments
Good analysis. It is not because what you said is what I like to hear but it is based on facts and data, fair and reasonable . truely a value buy . Good
2016-10-20 20:08
Nice write up.. not just utter assumptions and (whose better) comparisons with other companies. Well done !!
2016-10-20 20:16
BIG RED FLAGS LAH!
1) FORGET 16.7% FROM CAPITAL CITY 21. IT WAS A WRONG USAGE OF INDUSTRIAL LANDS FOR COMMERCIAL PURPOSE. LANDS SHOULD BE DEVELOPED AS FACTORIES. NOW THE VALUE OF LAND WILL BE STUCK LIKE A SORE THUMP!
THIS PIECE OF 16.2 ACRES LAND IN JOHOR IS SITUATED IN THE MIDST OF FACTORIES IN A MALAY MIDDLE CLASS REGION. AND THIS LAND WITH BOOK VALUE OF RM21.3 MILLIONS WILL BE STUCK IN LIMBO FOR A LONG LONG TIME
SO THERE ARE 2 LOSSES
A) LOST OF PROJECTED REVENUE OF 16.7% DUE TO MISCALCULATION. ANGSANA COMPLEX WHICH IS BETTER LOCATED IS NOW FACING DOWNTURN. HOW COULD CAPITAL CITY 21 THRIVE IN A SECLUDED PLACE?
B) RM21.3 MILLIONS LOCKED UP IN A WHITE ELEPHANT WILL BE LONG TERM PAIN.
2) DIRECTOR IS NOT JUST SELLING A FEW THOUSAND SHARES TO MEET SOME NEEDS. A RM5.5 MILLION SHARES DISPOSAL COULD ONLY MEAN THAT GADANG IS NOW OVERVALUE.
3) BY ALL CONSENSUS - WHEN MR MARKET IS ALMOST 100% IN AGREEMENT THAT GADANG IS A GOOD BUY - ALL THE PEOPLE HAVE ALREADY FULLY EXPOSED TO THE EUPHORIA.
EUPHORIA IS NOT THE TIME TO BUY. WE SHOULD BUY INTO PESSIMISSM & SELL INTO EUPHORIA
MY GREAT SIFU TOLD ME THIS, "TO BE GREEDY WHEN OTHERS ARE FEARFUL; AND TO BE VERY FEARFUL WHEN OTHERS ARE GREEDILY BUYING" MY SIFU'S NAME IS - WARREN BUFFET
2016-10-20 22:23
Good piece of writing. Hope tomorrow (21.10.2016) will still be green even though it is T + 3 of Tuesday rally.
2016-10-20 22:27
Calvin thinks Gadang's ExBonus Price Chart Will look like
One in between FIAMMA & POHUAT.
It will be just above average but not spectacular.
So those who OVERPAID will SUFFER FOR ITS CONSEQUENCES LATER
2016-10-20 22:37
calvin how do you know this capital city 21 is in secluded area?u really been there before?which means u got see it for yourself in real life?
2016-10-20 22:45
Posted by wkitwing > Oct 20, 2016 10:45 PM | Report Abuse
calvin how do you know this capital city 21 is in secluded area?u really been there before?which means u got see it for yourself in real life?
Haha!
I own a house about 5 minutes drive from Capital City 21.
So I have seen it as often as I go and collect rental. I also took some photos of it.
2016-10-20 22:47
but calvin all u mention is capital city 21,then how about kwasa and its construction section?only one disadvantage does not mean its bad
2016-10-20 22:48
Posted by wkitwing > Oct 20, 2016 10:48 PM | Report Abuse
but calvin all u mention is capital city 21,then how about kwasa and its construction section?only one disadvantage does not mean its bad
Calvin replies:
I didn't say that everything about Gadang is bad. I only say that Gadang is now way overvalued.
And if you read the balance sheet of Gadang more carefully you WILL NOTICE THAT THE MAJORITY OF ITS PROFIT IS NOT FROM CONSTRUCTION - BUT FROM REAL ESTATES.
So the only single failure of Capital City 21 will impact on its overall results.
And if Gadang price shoud retrace by 30% after bonus issue - many who chased it at the peak will be in deep trouble
And Calvin does not wish to see any i3 Forumers suffer
Hope you understand.
Like this
If I SEE a pothole 4 feet deep ahead of the highway. And careless and carefree people (merrily laughing hee hee haha) with cars at FULL SPEED & totally oblivious to its oncoming danger. Do you think I should just keep quiet and pretend not to know anything.
What if those people in the cars are my relatives?
And if they get killed and seriously injured? You think I can still move about with a good conscience?
Hope you all understand
2016-10-20 22:58
capital city - award-winning APAC property developments http://www.hattengrp.com/inc_events_popup.php?id=36
2016-10-20 23:46
Posted by stocktrader3 > Oct 20, 2016 11:46 PM | Report Abuse
capital city - award-winning APAC property developments http://www.hattengrp.com/inc_events_popup.php?id=36
Award winning off plan maybe.
For all practical purposes these are the features if you go there and SEE for yourselves
1) On the left of the Capital City 21 is a factory. Outside the factory are old lorries and containers with the name "HAMDEE". Hamdee sounds like HamYi which means "salted fish" in cantonese
2) Opposite the Building is a newly built roundabout. Roundabout speaks of little traffic. Few cars pass by here even during lunch time
3) Along the road there is no five foot way for walking. Only grass patches. In Malaysia you only find these kinds of roads in kampungs or rural areas.
4) Directly opposite Capital City 21 is a row of shops catering to middle class Malays. And one of them has a sign board called
SOUP TULANG ZZ
I really don't know why got ZZ on its signboard. Is it because this is a deserted sleepy place?
5) And Capital City 21 is not visible from the Pasir Gudang highway. There is a link road from the highway also an exit only on same side of the road. It is neither visible nor easily accessible from anywhere. No bus route and very few taxis pass by here.
I think you guys should just drive here and see for yourselves.
Those who bought Capital City 21 offices or shoplots and those who chase Gadang shares will later suffer its stark reality.
Then cry father, cry mother also no use lah!
2016-10-21 00:09
After ex-all, Gadang will also be like Pohuat with target price of RM2.00 for the mother share and RM1.20 for the warrant. Condition: Must wait for MRT2 and LRT3 end of this year.
2016-10-21 00:19
Please read the latest RHB report dated 18 October 2016 for reference. From the tone of the meeting with management, they sounded more positive on the earnings visibility and also undemanding valuation.
TP of RM3.50 (should we take out the DCF of Capital 21, it is only about 22 sen). Impact is minimal. Of course, we cannot simply just take out the entire DCF just like that, more detail work need to be done. This is worst case.
2016-10-21 01:22
Why are you all being conned by RHB? The report is for insiders(& directors) to sell and you all to buy.
2016-10-21 03:09
Rhb report?
This was what happened. Years back Rhb ib came out with yearly stock picks called JEWELS. 100 JEWELS, Then 50 JEWELS AND LATER 30 JEWELS.
One of the highly recommended Jewels was DPS at 50 cts. At that time 10 years ago I was a newbie. So I thought what Rhb called JEWEL must be good. So I bought DPS upon Rhb recommendation at 50 cts.
Not long after buying DPS I was shocked to see RHB DUMPING DPS BY THE MILLIONS LIKE NO TOMORROW. SENSING SOMETHING WRONG I IMMEDIATELY CUT LOST ALL MY DPS SHARES AT 45 Cts for a 10% Loss.
Later DPS crashed all the way to below 10 cts. A crash of over 80%
I asked Rhb Top Boss why Rhb recommended DAMN LOUSY DPS. HE SAID THAT RHB UNDERWRITE DPS ON IPO. SO RHB HAS NO CHOICE BUT TO PASS THESE DBS SHARES TOGETHER WITH OTHER GOOD RECOMMENDATIONS IN THE RHB JEWELS.
LATER RHB ALSO RECOMMENDED PERISAI AT RM1.50 in its JEWELS. I THOUGHT AFTER PERISAI CRASHED 70% to 36 cts it's quite safe to buy. So I told i3 forum members Perisai can buy at 36 cts.
PERISAI CRASHED TO ONLY 6 cts now and i3 forum members are blaming me.
See,by blindly following RHB WITHOUT DOING YOUR OWN RESEARCH YOY MIGHT LEAD OTHERS ASTRAY.
2016-10-21 07:55
Hmmm.... Looks like the IBs are bigger AH ALOONG bcos they are legalised by BN governments........
2016-10-21 09:36
Even Kok Onn don't believe Gadang can fly further and sold. Why ikan bilis so optimistic?
2016-10-21 10:56
Error in earlier comment on shareholdings. Will relook and update later.
2016-10-21 11:44
No need to pay too much attention about shareholding. too many possibility, ask kok onn during agm if you interested to know.
2016-10-21 12:29
better analyze how kwasa project able to generate earning for company in next 3 years. if the figure is encouraging, i think property division earning growth is more or less secured. for construction division, less worry due to plenty of opportunity about contract potential, just need to wait for announcement, that's the frustrating part for those who are impatient.
2016-10-21 12:33
@stocktrader3 pls read RHB's report. They have estimated the Kwasa Land deal. I think it is very very conservative.
Not many construction and developer has net cash. For Gadang's case is net cash position of RM94.4m FYE16. The top 10 listed property companies (matured) has a gearing of about 0.5X (Just for reference).
2016-10-21 15:21
after the meeting.......... management is conservative........positive (although caution)........... likely results is better than expected. Should the MRT2 contract comes sooner, rerating on upside is likely. (This may be the Part 4). At RM3.20, I believe touching RM4 is possible once MRT2 is secured.
2016-10-22 00:20
What I have observed the more calvintan bad mounth on this gadang the more the price go up. No offend cavintan as I know u are nice chap.
I also want to thanks KYY and OTB for recommending this stock. They are genuine and always teach the newbie to invest in stock market, of course they are not god and expect 100% correct. Have a good weekend.
2016-10-22 01:04
Posted by Wisdom > Oct 22, 2016 01:04 AM | Report Abuse
What I have observed the more calvintan bad mounth on this gadang the more the price go up. No offend cavintan as I know u are nice chap.
I also want to thanks KYY and OTB for recommending this stock. They are genuine and always teach the newbie to invest in stock market, of course they are not god and expect 100% correct. Have a good weekend.
Haha!
I happen to see your post and I want to reply here:
Last time I warned about Sumatech at 40 cts. Sumatech even climbed to 60 cts. Then? Then Sumatech crashed to less than 10 cts and turned into Sudatrap!
Same goes for IFCA. All and everybody chased this IFCA to cross Rm1.20.
And even Alpha Trader championed this stock. So with all piling in like a game of musical chairs or ponzi game IFCA flew to Rm1.87.
So does this mean they were correct? No!
In the end IFCA gone triple limit down to below 50 cts & Alpha Trader disappeared from i3 Forum
SEE ALPHA TRADER 2nd Last Post Before he disappeared in May 2016:
Posted by Alpha Trader > May 25, 2016 11:35 PM | Report Abuse
SAYONARA
I hope both Kyy & OTB do well in their investments.
I don't wish to see them disappear like Alpha Trader some future day
Good night
Warm regards & concern,
Calvin Tan Research
ZZZZzzzz,,,,.......
2016-10-22 03:17
bro sosfinance, how u able meet the management ? u are fund manager? or private request ?
2016-10-22 07:44
now i know why most of the i3 member dislike this fellow calvin. even bro icon888 also dislike him. Annoying behavior , mental problem ?? only empty drum sound big.
2016-10-22 07:51
@Ricky, I am one of the many thousands like you, who happen to have assess to a fund manager. So, I have a little unfair advantage to other investors who do not have. Similarly, the unfair advantage sometime could be a curse at the same time. I part time fund manager actually, without the "d".
A math question for my readers, how much will you get if you invest RM100k and compound it 2x, then 3x, then 4x and lastly 5x? Those who can do that, very highly likely, will not be in this forum. He or she will likely running funds like Brahmal or become top 30 largest shareholders in many good PLC like Mr Fong Siling.
2016-10-22 10:25
Lol calvin I still remember you bad mouth gadang last year when the price was at around 1.4 and u warned all to sell. But what really happened? 1) profit hit new high (from 60.9m to 94.7m) 2) eps new high (from 27.89 to 40.84) 3) share price up from 1.4 to 3.2. That means u were wrong and those who had listened to ur advice had missed the opportunity to gain 130% in 1 year time!
2016-10-22 10:54
calvintaneng Counting chickens before they are hatched? http://klse.i3investor.com/blogs/rhinvest/81350.jsp
Be careful lor!
I visited Pengerang's RAPID twice. There are not enough accommodation nor workers there in Sungei Ringgit! All the skilled workers have left for Spore! Think Bangla will do the job? Think again.
As for Capital City 21 I pass by there almost every week as I have a house nearby in Kempas. Better go and see the progress yourself. It might be a Gajah instead of Gadang - a white elephant. It might well be Gadang's Achilles heel. Better throw all Gadang shares first thing tomorrow!
16/08/2015 21:33
2016-10-22 10:55
thanks for ur info,bro sosfinance, i also hoping i will be a top 30 in shareholders ,maybe soon in my next target stock. i manage my family fund. because i believe size does matter. Mr Fong Siling also start from tiny fund but with right behavior & perception . i also believe retailer can beat fund manager in long term like Mr Koon & Mr Fong.
2016-10-22 10:57
lucky i follow bro icon888 & i bought average 1.36 . he is one of the best sifu .
2016-10-22 11:03
OMG, calvin said the same thing when gadang was RM1.30 last year?
Posted by calvintaneng > Aug 16, 2015 09:33 PM | Report Abuse
Counting chickens before they are hatched?
Be careful lor!
I visited Pengerang's RAPID twice. There are not enough accommodation nor workers there in Sungei Ringgit! All the skilled workers have left for Spore! Think Bangla will do the job? Think again.
As for Capital City 21 I pass by there almost every week as I have a house nearby in Kempas. Better go and see the progress yourself. It might be a Gajah instead of Gadang - a white elephant. It might well be Gadang's Achilles heel. Better throw all Gadang shares first thing tomorrow!
2016-10-22 11:06
"The evil that is in the world almost always comes of ignorance, and good intentions may do as much harm as malevolence if they lack understanding" Albert Camus.
Malaysia is already full of "leaders" who run the country and who made irresponsible statements almost every day.
2016-10-22 13:51
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What a great piece, Sos.
2016-10-20 19:15