Kancs: yes to your questions above. How about you?

Kancs, do you have an idea of where Icon8888 is in this forum? He has been extremely silent, quite strange for a strong proponent of GOB. Don't u think?

Kancs, no. It does not have such service. But if u look at the line of executive directorship,
Mr Wee was formerly with Pavilion. Mr Ta is only 20+ years old. Without strong backing, do u think a young chap can gain a board seat in the company.

What do you think of the risks I highlighted before ?

Thanks Kahheong.
It is still too early to tell whether it was a "wrong" decision. Time will tell. Be courageous if we believe in and be convicted with our homework.

Remember those who held it years ago that saw price dropped from 3 to about 1 many years ago. Then, you will feel more confident.

The price now is lower than when the water deal was still loomed with high uncertainties then. The sell down is in line with broad market sentiment, MYR currency risk and sell off by probably foreign fund.

Kancs3118: these are the risks I think more pronounced. Will be good if you can provide more insights of your assessment of such risks.

As for the shareholding analysis, you can refer to "Analysis on Shareholding" page of the latest Annual Report.

Iska, fully agreed with your views above.

Kancs3118: Actually, I do not really know the integrity of its management. Have not attended the AGM previously to at least know who they are.

The risks are always there : Management integrity, high loan with potential hike in interest rate. To be very honest, I am not so comfortable with its high borrowings.

As for project not selling well in 2015, this would be much mitigated as the three projects (Damen, Springville and Galleria) have good take up rate, so payments from buyers (banks) will be less of an issue.Do you know how much is its unbilled sales?

As for JV with LGM, this will not proceed so soon given the softening of property market. I am actually quite surprised there is no visibility of Batu Kawan project in 2015 (no planned launches).

Please remember the important point highlighted by Iska before, i.e. too many retail shareholders holding more than 50% of its shareholding. Retail investors with their relative weak holding power will throw their shares at any onset of panic selling - as you can see the more than 30% drop in share price in less than 2 weeks. On a positive side, you may want to suspect the "intentional" BIG investors may quietly building up their controlling interest.

Out of the 65% shareholdings held by 213 accounts, only 1 account holds more than 6.5% with the remaining 212 accounts holds between 100,000 to 11.3 mln shares.

6,260 accounts hold the next 23% of shareholding totalling 77.3 mln shares with shareholding of 1,000 to 100,000 shares per account.

So, the share price will be very easily manipulated by someone with strong financial backing wanting to control the company. The rights issue and the recent free fall of share price could be manipulated for these ppl to scare off retail investors from subscribing their entitlement, and leaving a lot excess shares for these BIG investor to increase their shareholdings at much cheaper price. Just some thoughts, I may be wrong.

what is your view of the recent Seberang Prai Selatan land transaction by Vitrox (RM 32 psf)?

kancs3118, Iska: Few days ago, Vitrox bought a piece of land 22.3 acres at Seberang Prai Selatan at ard RM 32 psf. So, this is much lower than what was paid by Paramount to PDC (RM 51 psf) at Seberang Prai Selatan.

Industrial land (by Vitrox) should be more valuable than residential land held by GOB, right? But then again, I am not sure where the 22.3 acres Vitrox bought is located at Seberang Prai Selatan. Any views on this?

Interestingly, I am actually quite missing Icon8888. He has been lying so low and so silent after the price comes down. I would expect a strong proponent of GOB like Icon8888 would be more courageous to moderate intellectual discussion on GOB despite the price. We should be more concerned about value rather than price. I hope he still honor his words of saying that subscribing the rights at 50 sen is a no brainer, and he will just subscribe without needing to do any Maths. We support Icon8888.

I fully subscribed my Rights entitlement and applying for more excess shares. Though, I am pretty sure that the rights will be undersubscribed.And not even surprised if the price post rights listing drop below 50 sen.

Kahheong, please remember Puncak is also bidding for a few projects notably at Pengerang RAPID, Kepong Incineration project etc.

Bid for RAPID has high likelihood of being awarded. There are only limited number of Water Treatment Companies that can qualify to bid - Aliran Ikhsan, Ranhill Utilities and Puncak. These are friendly parties, and all of them will likely to have a share of the pie as there were many water treatment packages dished out then.

The RAPID project has already been FID (Final Investment Decision), a term used in the oil industry indicating budget is approved to execute. So, this will proceed notwithstanding the oil price volatility now.

So, the catalysts will be:
1. RAPID award likely end year or Q1 2015
2. Conclusion of water SPA and pay out of the RM 1.5 bln
3. Many assets will be on sale at the market at attractive prices be it O&G or plantation assets. Those with cash will be spoilt for choices.

Thanks Kahheong. Need some clarification from you:
1. How did you derive the 329 mln (debt in recent proposed disposal)?
2. What do you mean by roughly 280 mln non-cash asset?

3. Is there a simplified way to calculate how much Non-CA related assets & liabilities to be transferred from PNSB to PNHB?

4. Is Wisma Rozali at PNHB level or at PNSB level? is it CA or non-CA related asset?
5. How about the other land assets? I suspect all those land assets listed in the Annual report are CA related as these are the land on which the water treatment plants or pump houses are built.

By the way, I do not think TSR is the only private party who subscribed to the Sukuk though he could be one of the party. Cold Eye once said if one has done enough home work, price that one considered cheap should be cheaper if it drops further. I believe you have done enough home work. All the best. Waiting for your sharing of my above queries. Thanks.

Thanks Kahheong. At 2 bln, this shall translate into net cash of approx. 3.75 per share?

Kahheong, the Sukuk will definitely be fully converted if the share price not drop below 2.00. I am aware of the dilution impact of the conversion.

By the way, how much is your estimate of Puncak net cash post disposal and post full Sukuk conversion.

How do you see the B6 1h)?

Hng33: I recall your previous net cash per share estimate is more than RM 3 per share. Your post this am is only RM 3 per share. Why?

Kahheong, hng33: you are very good at interpreting account. Would you be able to interpret the accompanying notes of Puncak Q3 results in Section B6 point 1h). Anything positive you see there? A waiver of upto RM 350 MLN debt.

3. Oil price crashing down - GOM has a contract into 2016 for T&I job. The awarded PNS job will be carried out because those projects already been approved and budget is available.

4. No core business after water asset disposal. On the other hand, the company will be cash rich by then, isn't it an opportune time to have plenty of cash now - lots of assets for sale at attractive price.

5. Has Tan Sri Rozali sold any shares of his to date?

6. Will LTH take a loss just because the shares are non-shariah complaint now? What the rules say?

Where is HNG33, Tornado? Let's hear some constructive discussion here

Kahheong,following your postings, you have quite a lot of Puncak holding together with Tornado, Hng33 etc.

In this time of volatility, one must be able to think calmly and take informed decisions: We need to ask questions and find the answers:

1. Why Puncak now is not Shariah compliant? It had just issued Sukuk Ijarah, an Islamic bond in 2012. Is it because of high debt?

2. If the sole reason is because of high debt, isn't it a non issue because Punack will be cash rich before Q2 2015? If that is the case, it may be reinstated as Shariah compliant by June 2015? So, must find out why it is not Shariah compliant now. Could it be other reasons?

3. Oil price crashing down -

Hng33 on leave from the forum?

Kahheong, everybody is expecting LTH to sell but what if LTH has not sold yet? In the first place, I find so far in this forum, nobody asked why Puncak is classified as Non-Shariah compliant? Normally, a major shareholder owning more than 5% has to declare its transaction within 5 working days of the transaction.

Have you ever considered it is the foreign fund selling due to gloomy outlook of the MYR currency? Note that MYR is predicted at an exchange rate of RM 3.49 to a USD. Also, please remember eTiQa insurance fund also owns quite a substantial shares at Puncak (pls refer to Top 30 shareholders list)

So, LTH has not sold yet can also be a possibility.

I am surprised my post yesterday did not generate any discussion.

Kancs3118, out of the 142 MLN proceeds, 35 MLN is used to pay down the loan in that parcel of land being transacted. The remaining 107 MLN is used as working capital (fund for the acquisition of the dinner ware company inclusive).

Investment banks are underwriting it and will try to place out to interested buyers. Investment banks does not function to pick up and keep undervalued shares.

I do not know much about GOB valuation. Still waiting for Icon8888 to shed some light during this time of uncertainties. Time is catching up for us to decide to subscribe or not.

Ladies and Gents:

1. Do you notice that GOB borrowings at LPD (Latest Practical Date) per the Prospectus is RM 306 MLN, compared to FYE 31 Mar 2014 of RM 212 mln?This is an increase of almost RM 100 MLN in borrowing in about 6 months?!

2. Secondly, the proceeds from the rights issue will only be used to fund the projects at Da:men, Springville and Galleria in the Klang Valley, and pare down the borrowings. Approximately half-half to pare down borrowings & funding Klang Valley projects. The rights issue proceed will not be used to fund the Batu Kawan projects as what Kancs3118 hoped for.

3. With a retail shareholding structure of almost 6000+ shareholders holding less than 100,000 shares, it is VERY HIGHLY LIKELY that the rights issue will be under subscribed. In such case, the underwriters (Investment Banks) will have to pick up the unsubscribed portions of the rights and warrants. If this scenario pants out, then the GOB shares will be under a lot of selling pressure post rights, as these investment banks will need to dispose of these shares.

I am not sure whether our sifu Icon8888 will still recommend to subscribe the rights come this coming Tuesday? Icon8888 has been quite quiet lately - hopefully not disposing all his shares already. Hope to hear his views during this uncertain times.

If we consider ourselves as investor and not punter, perhaps we need to ask the following questions:
1. Why suddenly Puncak is classified as Non-Shariah compliant? Is it because of its high debt?
2. If it is because of high debt, will this be still relevant when the cash proceeds come in next year?
3. If you are Tan Sri Rozali, what would you do?
- take a bridging loan of approx RM 600-700 MLN to buy out the remaining 55% I do not own. Come q1 next year, I take full RM 1.56 bln, then pay back the loan. I still have about RM 900 MLN remaining cash proceeds plus all the PNHB ASSETS and Liabilities plus the biz.

Think about that rather than speculating. This will help you in this uncertain time.

Hopefully can spark some meaningful discussion here in the forum.

Do we know why Puncak is now classified Shariah Non-Compliant?
If it is because of high debt, then is this an issue as post water asset disposal this will be net cash company?

Anyone like to share their views/insights?

Kahhoeng, I am not concerned about the current correction but rather see this a good accumulation opportunity to increase our stakes. I have had pleasant experience with CIHLDG a few years back when it sold it's prized jewel Permanis Sdn Bhd (Tropicana juice, remember) to a Japanese F&B co. People were concerned then how Datuk Johari Ghani utilize the cash proceeds. After distributing the first cash dividend, he returned most of the cash proceeds after it cannot find a good buisness within the specified period. People were throwing the shares then thinking that he will acquire biz that were not adding much value. At the same time, parties related to him kept acquiring the shares while ignorant retail investors were throwing the jewel shares. You can trace the history by checking from the Bursa announcement.

Bottom line question we must ask ourselves is that do you think TSR will be acquiring any biz at all cost to the extent of eroding the company value? Please remember he has the biggest stake with almost 43%! 冷眼 said for those who have done enough home work, one should know the 底线 .

Hng33, I do not think all vacant land are non-CA related. I suspect many of them are actually land where the WTPs are situated. This is the missing puzzle in my value calculation.

Will be nice if any who have insights can share their thoughts.

Thanks

Kancs3118, on your question above. My thinking is 50 sen increase from 2.60 is about 20%,while 50 sen increase from 90 sen is about 55%. A 55% increase of 2.60 is approx. 1.40.

Similarly, a 50 sen drop from 92 sen for GOB will wipe out more than half of your capital :),

Bottom line is how much upside/downside, in terms of %, you see from GOB and Plenitude vis-a-vis the associated risks.

I do not look really look at the absolute value but rather percent of return or percent of downside risk.

Hng33, r u there? We need your enthusiastic sharing on Puncak value assessment d(like in May/June) espite the lack lustre price performance now.

Be greedy when others are fearful/doubtful. Harvest only for those who sow and prepared :)

Kahhoeng, do u have an idea of how much non CA related assets/liabilities that will be transferred from PNSB & Syabas back to PNHB? I remember hng33 mentioned before about 500 mln worth of land but can't find any evidence from the AR.

Anyone want to contribute?

Thanks Iska.

Agree with your analysis on prop stock direction vs physical market. Do you think GOB could fit the bill you just described of good dividend (maiden dividend :)) & corporate actions like merger into larger Desmond Lim property empire or injection of Damen into PAVREIT?

Interesting to note that u also owned Plenitude. What make you sold? The too conservative management that is obsessed to keep cash to buy land at low price during crisis & keep dividend payout at only about 20%? If u look at the list of properties there, their big land bank in Tebrau, Johor and Puchong, Selangor are carried at cost price in 1999. To me, this is an ultra safe counter with no management integrity issue at all ( I wish I can say the same for GOB but can't as did not have chance to interact with its management yet). Look forward to your sharing & exchange on Plenitude.

Kancs3118, thanks for recommending Symlife. I have been accumulating Plenitude as well. Net cash company with net cash RM 396 mln (RM 1.46 per share). No gearing with land bank carrying at purchase cost in the 1990s. I had a chat with its senior management the other day and was informed that it bought a piece of land at Balik Pulau in year 2010 at only RM 17.50 psf. If total land revalued, it could be easily worth 3.00 per share. Plus the 1.46 cash, we are looking at 4.50.

Just that ppl now are less sanguine about property stock, anticipating softening of property market next year. If interested, we can discuss separately at Plenitude forum. I did not post anything at Plenitude forum as I do not find any interesting interaction there.

Kahhoeng, thanks for your excellent sharing of equity calculation. Need some clarifications:

How do you derive equity of RM 2.191 bln after disposal? How much do you assume Investment in PNSB that form the total company equity of RM 963.38 mln in 2013 AR?

Also, do you have an idea how much non-CA RELATED assets and liabilities are to be transferred from PNSB to PNHB? Look at the list of properties, only office lots at Eu Tong Sen street in Singapore is clearly not CA related.

RM 4.47 per share is the minimum case (per your calculation above) I think.

If we add potential value from this net asset non-CA (hopefully positive value) and the value of the O&G biz, the net value can easily be RM 5.50. DLB 264 pipe laying barge is a very valuable asset.

Now, let's look at the rationale why the price is lack lustre despite the uncertainties surrounding the SPA have now been cleared up. Remember, the price shoot up to RM 3.70 in May/June when it was announced that PNHB has agreed in principle to sell. Then, price took a hitting with Selangor MB saga with uncertainties that DSAI and gang esp. Rafizi will scuttle the deal when Wan Azizah becomes MB - price even came down to around 3.20. Market also uncertain hovering around 3.20-3.30 when Azmin came in. Only Tabung Haji has been upbeat with big accumulation during the uncertain period. Now everything has cleared up, yet the price still lack lustre. Is it because the dividend payment of RM 534 mln (RM 1 per share) does not meet market expectation? What is your view on this? Mere market sentiments issue.

Remember PNHB has announced bidding for Rapid contract and Kepong incineration contract?Rapid contract result should be known before year end. Also, the O&G T&I business has secured RM 2 bln contract up to 2016. Short term oil price volatility will not likely to affect business during this period.

Will be glad to hear your view. I guess you are a long term value investor like me, who are more intrested in getting big value from biz.

Thanks.

Also one more point, any major shareholders undertake to fully subscribe its entitlement? Who underwrite in case the rights are not fully subscribed?

At 50 sen, I will subscribe. No doubt there is deep value in this stock. Just wonder, with the expected softening of property market going forward, could we possibly get a cheaper entry price than the current 92 sen if we wait a while? People are less sanguine about property sector at least for the short term. We may need to be on for a while before seeing the unlocking of the value to be reflected in the share price. Any views from Iska, Kancs3118, Icon8888 or James?

Kancs*...... My finger is too big for an iPad key pad

Kands, waiting for your comments on RM 660 mln GDV for its Batu Kawan land. 200+ acres. Shouldn't it be more?

Looks like we have quite a number of like minded people in this GOB forum. Iska, thanks for sharing. Agree that Icon8888's analysis is well researched and investment case logically reasoned.

Weak retail shareholders throwing jewel, I am not too concerned. If the value is there and managemnet no hanky panky, the price will eventually reflect the value. A company cannot be priced at 92 sen for too long if it's EPS is conservatively sustained at 20 sen for the next two years, and land bank worth at least RM 5 per share (at current mkt land price).

Investors with good holding power will definitely gain. I recall Icon8888 only conservatively target to double in three years.

As far as value is concerned, I m not worried. Only thing keep me concerned is how trustworthy the management is as far as minority interest is concerned. They make good money but not paying a single sen dividend over the last 5 years. They raised money thru rights and selling land, but bought into a company which is not related to its core biz.

Directors are exercising share options at RM 1.00 per share. So, at 91 sen is really cheap man!
U said PNT 10 mln profit guarantee for 3 years, so the actual purchase is only 20 mln. It is profitable then should be ok.

The 108 acres of land at seri kembangan - are they near to the 15.56 acres sold?

Batu Kawan GDV only 660 mln? Or is it just part of the land there being developed?

What Puncak needs now is contract award flow from Rapid? This would be a good catalyst.

@hng33, how do you derive RM 1/ share for the land/ property/cash? About Rm 500 - 600 mln. From the annual report, how do you differentiate those non-concession related assets and cash from those related to concession related?

How many new shares created when total warrants and Sukuk converted I to mother shares?

@kancs3118, thanks. The transaction with Malton involved purchasing land at Semenyih at about RM 30+ psf, if I can recall.. So, deferred payment is better, isn't it? Question is whether RM 30 psf at Semenyih rasonable?

I am also puzzled why a company making cash call through rights issue let itself distracted by putting RM 50 mln in biz beyond its sphere of competences? How do you rate the integrity of the management?
The company seems to be short of cash flow.... Firstly, selling land to raise RM 142 mln, then rights issue to raise approx RM 120 mln. Total 250-300 mln, then throw 50 mln into tableware biz. Make biz sense?

Price keeps falling. Back to my original question. What we see that others don't or what others see we don't? We see the positive side and the deep value. I keep accumulating the last few days. Anybody can provide any negative side of the views so that we can have a more balance view.

Now the RM 1.56 bln is sure in hand. The valuation should be more firm. There is still lots of upside despite ppl selling down yesterday.

@hng33, I remember you did a very nice calculation of Puncak fair value (fully diluted taking into account warrant & Sukuk Ijarah conversion) before. Could you share with us again please? The 1,56 bln, cash and land at PNHB holding level, O&G biz, construction etc.... Many thanks again. You are the most persistent one promoting Puncak.

Azmin warned concessionaires not to delay the water restructuring. Who does he direct this warning to? splash? Or Puncak? Or both? If It is Puncak, then why Puncak doesn't want to sign if the offer price is the same RM 1.56 bln equity value as already agreed?

Really miss @upsidedown119 and @stkoay. 119, r u giving up hope on this tiger?

Thanks Icon8888. If Paramount purchase price of RM 51 psf is taken as the benchmark, then the land bank at Batu Kawan alone is worth RM 520 mln, or about RM 2.29 per share. Isn't this way undervalued? Yet, the share price drops further to 97.5 sen today. Just wonder, is there something people see we cannot see or what we can see people can't see? Buy some more, anybody? Before more people see the value! Comments welcome

Paramount purchased 30 acres from PDC for RM 67 million. So about RM 51 psf. If GOB land at Batu Kawan is nearby, then this should be the benchmark price. Carrying value in GOB book is only RM 10 psf. @Kancs3118, any comments on this?

Anyone knows latest psf land price at Batu Kawan near GOB land bank based on latest transaction price? Is GOB landbank near to the landbank acquired by Paramount early this year for KDU campus?

Thanks Icon8888.

Still waiting for u to educate me in the progress billing part

@Kancs3118, on your question regarding the net gain from land disposal of 8
RM 85.22 million, I suspect it is net of encumbrances of RM 35 million bank loan. If you include RM 35 million loan in there, you will get more or less cost price of RM 30 psf

Sorry, I mean @Kancs3118

@kanca3118, thanks. What does decrease in progress billings mean?