THE INVESTMENT APPROACH OF CALVIN TAN
A brief look at Gadang latest quarterly result (Calvin Tan Research)
calvintaneng
Publish date: Thu, 27 Oct 2016, 10:46 PM
calvintaneng
0 1,842
Hi Guys,
I have An Investment Approach I which I would like to all.
I have An Investment Approach I which I would like to all.
Below are the figures of Gadang latest results
SUMMARY OF KEY FINANCIAL INFORMATION
|
|
INDIVIDUAL PERIOD
|
CUMULATIVE PERIOD
|
||||
|
CURRENT YEAR QUARTER
|
PRECEDING YEAR
CORRESPONDING QUARTER |
CURRENT YEAR TO DATE
|
PRECEDING YEAR
CORRESPONDING PERIOD |
||
|
31 Aug 2016
|
31 Aug 2015
|
31 Aug 2016
|
31 Aug 2015
|
||
|
$$'000
|
$$'000
|
$$'000
|
$$'000
|
||
| 1 | Revenue |
104,600
|
149,382
|
104,600
|
149,382
|
| 2 | Profit/(loss) before tax |
22,117
|
25,878
|
22,117
|
25,878
|
| 3 | Profit/(loss) for the period |
16,622
|
20,757
|
16,622
|
20,757
|
| 4 | Profit/(loss) attributable to ordinary equity holders of the parent |
16,696
|
20,862
|
16,696
|
20,862
|
| 5 | Basic earnings/(loss) per share (Subunit) |
6.46
|
9.61
|
6.46
|
9.61
|
| 6 | Proposed/Declared dividend per share (Subunit) |
0.00
|
0.00
|
0.00
|
0.00
|
|
AS AT END OF CURRENT QUARTER
|
AS AT PRECEDING FINANCIAL YEAR END
|
||||
| 7 | Net assets per share attributable to ordinary equity holders of the parent ($$) |
2.1100
|
2.0500
|
||
Corresponding Year Quarter to Quarter Result
1) Revenue dropped from 149.382 mil to 104.600 mil = a drop of 42%
2) Earnings per share also dropped from 9.61 mil to 6.46 mil = a drop of 48%
3) NAV increased from Rm2.05 to Rm2.11 = Up 2%
Today as at 27th October 2016 Gadang's closing price is Rm3.29
Last Year 27th October 2015 Gadang closed at Rm1.51
So in one year (365 days) Gadang share price has gone up from Rm1.51 to Rm3.29 or Rm1.78 or up 117%
So Revenue has decreased by 42%
Profit has decreased by 48%
NAP gone up 2%
Share Price is up 117%
Now let's take a look at the Balance Sheet & other information (please refer to the information provided)
Constructin Revenue dropped from Rm105 mil to Rm42 mil (Dropped 60%)
Property Revenue increased from Rm38 mil to 56 mil = (Increased by 47%)
So Property Division has done better than Construction.
And now Calvin Tan Research found some red flags
1) Was the Sale from Property due to Capital City 21? There is no direct mention.
What is mentioned are these words:
Property Division Development focus is on building affordable homes for the current financial year, in line with market demand. Continuous efforts are directed at securing property joint ventures with land owners having approved development plans in order to improve on the overall property development timeline. Unbilled sales recorded some RM221.0 million.
Note: Unbilled sales recorded some RM221.0 million.
What are these unbilled sales? No indication.
Next question : What is unbilled sales?
Answer from wikipedia
UNBILLED REVENUE DEFINITION
https://www.ventureline.com/accounting-glossary/U/unbilled-revenue-definition/
Bookmark and Share. UNBILLED REVENUE is revenue which had been recognized but which had not been billed to the purchaser(s).
Aha! Revenue which had been recognized but which had not been billed to the purchaser(s)?
In other words, Houses/shops deemed sold to prospective buyers but sales have yet to be realized by
a) Bank loans yet to be approved
b) Customers yet undecided to go through the deal after giving token downpayment
c) Any other reason(s) why sales not yet materialized.
So these Unbilled Rm221 millions already recognized as sales but not billed yet or confirm sold as yet.
THIS IS A FORM OF ACCOUNTING TRICK TO SHOW HIGHER PROJECTED REVENUE OR PROFIT
A BIG RED FLAG!
Now look carefully again.
Total revenue has gone down 42% & profit gone down even more at 48%. Why profit down?
Please refer to figures quoted in 1st paragraph
Admin Expenses increased from Rm4.95 mil to Rm6.504 mil = Up 31%
Operating Expenses increased from Rm3.080 mil to Rm3.171 mil = Up 2.8%
Income tax expense increased from Rm5.121 mil to Rm5.495 = 7.3%
How come sales revenue down 42%, profit down 48%
But Admin expenses increased? Operating expenses also increased.
Most puzzling thing is this. Profit decreased 48% but income tax can increase by 7.3%?
What kind of accounting is this?
Really puzzling?
Now Calvin Tan Research did some investigations.
SEE
SALE OF CAPITAL CITY 21 LOOKS GOOD ON PAPER.
How many interested buyers actually bought? Were the sales aborted later AFTER they viewed Capital City 21?
And why Admin Expenses Increased?
Of course Capital City 21 has many pop up stores in Giant, AEON, Tesco & other places of prominent trying to get buyers. These pop up counters located at Front Prime Areas are expensive to rent. . So Admin Expenses have to go up.
Sales? Real sales? You must check with management.
And why prodit down 48% yet tax increased by 7.3%?
The answer is this:
Once you convert land title from agriculture/industrial to mixed use commercial both quit rent and assessment charges will go up. And Land Office will tax you even if the building is still in the process of construction.
This is why if you are not sure of selling - better don't build Or else there will be endless yearly assessment/quit rents even if the buildng is a White Elephant.
Will Capital City 21 be a long term liability?
So from the balance sheet & the table of content we know that Gadang is really another "pump & dump" operation.
Are you caught?
You have yourselves only to blame.
Next time please take heed to kind hearted warning.
As the Bible says, "A PRUDENT PERSON FORESEES THE EVIL AND HIDES HIMSELF. THE SIMPLE (SIMPLETON) PASS ON AND ARE PUNISHED" (Proverbs 27:12)
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Discussions
Be the first to like this. Showing 34 of 34 comments
stop talking crap calvin, gadang did some construction work, sales haven't come in, unbilled sales pun tak tao, can go and study secondary school or not
2016-10-27 22:53
For construction company, order book in hand defines potential of future earning.
2016-10-27 22:55
moneySIFU Mr Calvin, the definition of unbilled sales = contracted property sales but subject to progressive claims based on the percentage of completion of the building construction
27/10/2016 22:52
Yes, unbilled sales can be considered as progressive payment upon completion of building work. It can also mean that sales are aborted.
G Residence got 60% to 70% bookings or sales but many were aborted due to stringent loans or buyers deciding to pull out last minute. Booking fees could be refunded partially or forfeited.
2016-10-27 22:58
Alpha Trader stop talking crap calvin, gadang did some construction work, sales haven't come in, unbilled sales pun tak tao, can go and study secondary school or not
27/10/2016 22:53
Haha! Alpha Trader,
I once thought you got some value when you posted on EPMB. I was totally wrong!
You are an outright gambler. How many poor souls you led astray defending IFCA?
2016-10-27 23:00
also always like to use other example and paste it to gadang without prove, your example i can use to paste to every property counter lor
2016-10-27 23:03
calvin is like that lor, give general example and then slap it to the counter he dun like
2016-10-27 23:03
Calvin ,
You don't even know how to calculate percentage change correctly, why talking so loud here ?
Jesus said : I am most sad not because you do not believe me , it it because you are my son but you talk rubbish
2016-10-27 23:06
at least i made people rich before in ifca and smrt, have you had a 300% return in a year? stock boom and bust is common, i highlighted in my blog about risk and reward and cut loss point
calvin - the only good call i saw , i really can't remember, maybe bjcorp? it never go up before, but only one way ticket hahahaha
2016-10-27 23:06
btw, first time i heard look at balance sheet already know it is pump and dump. actually calvin is even more geng, he already predicted and said exactly the same thing when gadang is RM1.30....dunno who so lucky listen to him and don't buy at RM1.30.
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!
2016-10-27 23:09
keke,
ya, you are correct to mention this
Gadang's profit from construction is a mere 7%. This is due to the very high expenses incurred in Pengerang.
2016-10-27 23:13
It's hot topic here. No fighting please. Tomorrow we will know who is the strongest one. kekeke.
2016-10-27 23:54
Calvin,
I appreciate your contribution here and I'm not going to argue for Gadang since she has gone up quite a lot.
Could you recommend water sector? How about Taliworks, Salcon, Puncak or KPS?
2016-10-28 00:22
1. unbilled sales is like what moneysifu highlighted, not what's stated in the article.
2. gadang's property division has been the biggest profit contributor for some quarters already in case you didn't notice, which is why the market gives it low PE
3. gadang's contruction orderbook is really thin is a fact, if they can get some contract from upcoming infra contracts, then 1 big contract may be enough to last another 1-2 years. but if they don't then they are really screwed.
4. property profit is definitely coming from capital city, if not they won't be able to increase revenue and profit when everyone else's revenue are dropping. remember, gadang is not ecoworld. and capital city contribution will not last forever.
bottom line, gadang is a good company but future profits are clouded with uncertainty. so whether the current price is still cheap and how much upside is left will be up to your judgment
2016-10-28 00:22
that's the risk of low orderbook. but I think market is expecting players like Gadang who have won previous MRT contract to get at least some packages from all the infra project that will flow around. actually the bigger earnings risk is from property segment. once capital city completed (guaranteed by Hatten), property won't be easy to sell at this soft market
2016-10-28 07:47
KYY is going to sell. Remember his mantra: buy as long as profits are rising, sell when profits declining!
2016-10-28 08:41
Just take Calvin points as restudy gadang whether to sell or buy more..Anyway,may be super investor is starting unloading when results turn out undesirable..
2016-10-28 13:28
Calvintan's buy call on BPURI with latest quarter EPS of 0.39sen, annual EPS with PE10 give you = (0.0039*4)*10 = RM 0.156.
See how good this calvintan.
2016-10-28 13:44
914601117 Calvin,
I appreciate your contribution here and I'm not going to argue for Gadang since she has gone up quite a lot.
Could you recommend water sector? How about Taliworks, Salcon, Puncak or KPS?
28/10/2016 00:22
914601117,
For water theme play I bought Jaks at 40 cts because of Langat 2 and water restructuring play. Jaks has 6 ft diameter water pipes. Jaks has done extremely well shooting past Rm1.20 (up a very nice 200%).
Jaks & other water thematic play stocks bull run time now over already.
Other thematic plays were MyEG (Gst), Super Enterprize (Plastic stocks due to Oil Crash, Sabah Elections Stocks Theme Play, Steel stocks theme play due to Megasteel closing.
All these are now over soon as even Steel theme plays are at its tail end.
Looking forward:
THE NEXT ON THE AGENDA WILL BE GENERAL ELECTION GLC THEME STOCKS!
Now is still in its early days. So it is better to get in early & wait.
2016-10-30 16:33
Hello Calvin, can I meet you for a coffee or beer at Jurong west area this weekend ? I am also living in Jurong.
2016-10-31 08:51
MoneyFace88 Hello Calvin, can I meet you for a coffee or beer at Jurong west area this weekend ? I am also living in Jurong.
31/10/2016 08:51
Yes, will be free after 2pm Sunday in Singapore. Jurong Point wil be nice. See you.
2016-11-01 00:03
Integrity. Intelligent. Industrious. 3iii (iiinvestsmart)$â¬Â£Â¥
4.11.2016 MYR 1.16
7.3.2024 MYR 0.39
2024-03-07 15:30
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moneySIFU
Mr Calvin, the definition of unbilled sales = contracted property sales but subject to progressive claims based on the percentage of completion of the building construction
2016-10-27 22:52