@ Rich118; about the industrial land by Vitron.
My company recently expanded into Batu Kawan (BK). From what i know, the price of the industrial land being acquired approximates the price paid by Vitron. But there is a catch being that construction must be completed within a certain time period, failure of which will incur penalty and the land must be returned to the state at a cheaper price than being acquired. What this means is that you cannot benefit from price appreciation (and will lose) by playing with state land zoned for industrial purpose at BK.

I believe you cannot just compare between industrial land (leased by the state government) versus the typical 99 years leasehold land owned by GOB. The end game is different.

The state government is looking at the investment packages offered by the MNCs and the benefits/ multiplier effects generated by these investments and how the benefit will spill over to the state. The state government will be willing to "lease" at cheaper prices per square feet if the package is deemed to benefit the state economy in the long run. This end game is different compared to GOB who is more than willing to go slow. Like launching projects at BK by phases and increasing the selling price per phase to maximise revenue.

All of it will be good for the shareholders...provided if management takes care of minority shareholders and stop creating tsunami waves in the counter.

@ Rich118, do they have an online website which provides an update of "Analysis on Shareholding" ? Rather than having to wait until the end of the year....

@ Rich118, thanks for your posting,... what other risks can you foresee besides the following?
- high borrowings?
- management integrity?
- possible delay in JV with LGM?
- no visibility of Batu Kawan project?
- too many retail shareholders holding more than 50% of its shareholdings?
- anything else you want to add?
We may try to assess these risks one by one...

By the way, please teach me where to get the information on the number of accounts and percentage of shareholdings in each accounts? Like where to get the data:
<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. >

It seems that the company is in need of funds to gear up for project launches in 2015:
JV with Lembaga Getah: GDV RM1.2B.
Seri Kembangan: EQ City & Villa Heights: GDV RM401.0M,
Batu Kawan: GDV RM662.0M,
Sungai Long land: GDV RM200.0M.

Hence, we are looking at a company which is on a fast growth track and in need of loans to expand. Next year 2015 is going to be very challenging for Malaysia. What if their projects do not sell well?
The other positive points:
Both the land at Seri Kembangan and Batu Kawan is cheap relative to the market and will afford fat gross margins.
All the projects due to launch for 2015 are located at prime locations.

But this is just my guess.

Furthermore, in relation to point #1 as to why the company draws down an additional RM100.0M loans within 6 months?
I believe the major chunk of the loan is to pay off for Da'Men. Based on the prospectus, Da'Men is
- 56% completed, and
- estimated gross development cost = RM1.0B
Simplistically, this means they need an additional loan of RM1.0B x 0,56 = RM550.0M (maximum) to bank roll Da'Men.

I think what happens next is that they will either
- hive off the shopping complex to Pavillion REIT. Based on Icon8888's article, the Da'Men shopping complex itself is worth about RM500M, or
- keep the mall for recurring rental income.
Then again, there is no risk of insolvency given their top brass are from Malton/ Pavillion. They definitely know how to run a premium mall and match its rental income against the financing charges.

Having said all of the above, it seems to me that the company needs the cash proceeds from the rights issue and land disposal to finance its future growth rather than just to keep it afloat and service its loans.

@ Rich118,
Back to your point #2 (and point #1): Please correct me if i am wrong here....

The risk is what-if GOB mismanaged their finances, their projects don't sell well and they need the cash proceeds from rights issue and land disposal to pay off its loans.

From the prospectus, the proceeds from the rights issue will be used to pay down the loan for Springville, Galleria and Da'Men (exclude retail mall). All these 3x projects achieved near to 100% TAKE UP RATE (emphasis added) and is expected to be completed during 2015/ 2016.

This means it is NOT that the projects are not saleable. In my opinion, what mgmt is trying to do is to retire as much loan attached to these projects as early as possible (rather than bootstrapping and waiting until 2015/2016) and to roll the money to finance future project launches.

today's share price is for show only...to entice the ikan bilis to subscribe

Hi - about point 2, let us not forget about the land disposal at Seri Kembangan which will bring in RM142.0M cash proceeds.
http://klse.i3investor.com/blogs/icon8888/63239.jsp

By the way, about point 3; why the investment banks want to dispose off the remaining shares? Just a dumb question. Why don't they keep it?

@southwark: hate to admit it - but it seems you have a point.
https://forum.lowyat.net/topic/1517542/+1640

Hi guys - just asking, planning to apply for excess (in addition to the rights that i am entitled to). Just asking, in applying for the excess rights, do i get entitled to the accompanying free warrants? If say, i apply for 2000 rights, do i get 1000 free warrants?

Hi all sifus, i have been monitoring gadang for a long time. Please teach me how does construction companies work? I mean how their balance sheet will relate to their P&L?

Also, some kind soul shared with me - the best property developers who enjoy the highest margin seem to be the ones who construct their own properties. It seems Gadang is one of them.

@ yanxuan8, do you mind to elaborate as well?

Hi Raymondwood, what do you mean by "Probably that is how banker makes money, there are always banker as underwriter to commit subscribe. for the case of GOB, 70%++ is underwritten by bankers." ??

Care to elaborate??

@ Azlan88,
Thanks alot for your inputs. Besides the Sungai Long land carried at low cost, Star Residences, good net assets backing per share, Azman Yahya, what else do you like about this counter?? What future do you see in this counter???

Looking back at the historical price trend, this counter has been trading at RM0.90 to RM1.20 tight band for a long long time....(for 2 years)~!

Also, SymLife seems to going the way of Apple. Come out with innovative products that market wants and subcontract it to builders (like Samsung) to build them. What problems do you foresee with property developers who do not have an in-house construction team?

honestly, who would think this counter will drop so much????? First, it was the QE - then, it is now the oil price....aduiiiiiiiiii

http://gob.irplc.com/medianews.htm?filepath=GOB/GOB-TheEdge-02092014.pdf

Based on this article, the land size at Batu Kawan is 365 acres. Mmm...just wondering, where is the balance of the land (120++ acres)?

@ PikaChan, please share with me the proper method of valuation for property developers. I read through your posting - and this appears to be RNAV method. Where to read up on RNAV method?

actually, the story of Tambun Indah is more perilous compared to GOB. When Tambun started off with their Pearl City land, the land was not 100% theirs - if not mistaken, it was held together with a few other developers. At that point in time, the starting price per house is about RM220K to RM270K and the Pearl City land is not even considered as part of Batu Kawan (unlike GOB whereby their land is in the middle of Batu Kawan, 10 minutes from the exit of Penang Second link). At least with GOB, the land is 100% theirs albeit - it is a leasehold land. At least with GOB , the minimum starting price is at RM450K per house.

If we look at the business and the financial statements - there is a story to tell.

Please correct me if my story is wrong.

The main reason GOB cannot afford to pay a dividend is because RM50.0M is utilised to purchase PNT (a trading company) and they need to fund Da'Mein development project. Hence, this resulted in drawing down bank loans and the financing cash flows increased whilst operating cash flows decreased.

PNT and the F&B business has already contributed $20.0M in terms of segment revenue per the latest Quarterly results.

Concerning the company's leverage position, the story will turn out to be very different post rights issue + the proceeds from disposal of land from Seri Kembangan. I think the reason why they need the money is because they need to finance Da'mein and prepare the working capital for Batu Kawan.

Da'Mein is already a done deal. The residential/ SOHO component is 95% sold (per the prospectus) leaving behind the retail mall. Moving forward, we expect Da'Mein to contribute positively to the quarterly net profits. Please read on Icon8888's article about Da'Mein. He based the profits generated from Da'mein at post rights issue. If the retail mall is kept within the GOB's balance sheet, then we expect to have recurring rental income.

Next, GOB will focus on Batu Kawan and JV with Lembaga Getah. The Batu Kawan land is purchased at very low price and a lowest selling price for a double storey terrace is RM450K. Even if they sell every single houses at Batu Kawan at RM450K, they still stand to make money. How much? i need to work it out.

That is the beauty of property developers with large tracts of land at low prices. The GP margin will be huge.

I am more concerned in where is the 130 acres of BK land? I thought the press state they have 350 acres but the prospectus state they have 220 acres.

@ JN88, how about SymLife's land in Selangor? All very good?

mmm...about the land in Kedah - based on the chairman's statement from the annual report 2014 - they are looking to monetize the land ASAP. Also, i think one of their projects involved the land in Kedah - do not know the name.

@ JN88 - why do you say SymLife's landbank is not so good? Care to share?

Hi Yistock, care to share - what is the meaning of ROE?

maybe the answer can be found here:

I think this has got to do with the annual report 2014.

Capital Commitments - approved but not contracted for:
Under the Supplemental Agreement entered into between Batu Kawan Development Sdn. Bhd. (“BKDSB”) and Penang Development Corporation (“PDC”) on 31 March 2011, BKDSB is entitled to execute the sale and purchase of Parcel 3A and Parcel 3B of land owned by PDC on or before 30 September 2013 or within 24 months from the date of vacant possession of Parcel 2B is ready to be delivered by PDC to BKDSB, whichever is the later, subject to the condition that the sale and purchase of Parcel 3A and 3B can only be effected upon Penaga Pesona Sdn. Bhd.’s completion of the low cost and low-medium cost housings in Parcel 1 and Parcel 2A. The Board of Directors of the Company has approved the proposed capital expenditure in respect of acquisition of the said parcel of land at a cost of RM19.3 million.

Hi all sifus, anyone notice para 7.3 in the prospectus - mentioning GOB has approximately 229 acres of land at Batu Kawan? mmm...the figures being reported in the press is 350 acres. Where is the remaining 120 acres?

@ GOldenShares, if not mistaken, if there is a huge deviation between the 4 quarterly results and the audited accounts, the company is required to explain to bursa for the deviation.

previously, i am quite skeptical about the management - spending RM50.0M to acquire PNT (a trading company) and then resort to rights issue and worst still, selling a piece of their prized land at Seri Kembangan to fund for this acquisition and their working capital requirement.

But then, the previous quarterly results changed my mind. Their revenue by segments show about RM20.0M of sales come from trading and this figure is expected to balloon given that management is committed to diversify their income. I believe the sales mix will be 30% trading and 70% property.

fully concur with you Tornado... :-) When do you think market will recover?

Hi all sifus,
Just wanna ask - why the closing price yesterday was at RM0.94. Then, this morning, it spiked up to RM1.04 but the volume is not much. I mean any "reasonable" buyers will want to reduce their cost and enter between RM0.94 and maybe add a few cents. Why wanna pay so much at RM1.04??? What is the logic?

@ Azlan88, generous enough to share what is your average cost for SymLife?

wow...this Petronas is really powerful. The Star Business ran an article stating Petronas will cut Capex and the whole market drop like crazy.

wow...this Petronas is really powerful. The Star Business ran an article stating Petronas will cut Capex and the whole market drop like crazy.

die...sell off everything

the market is like shit...sell off everything....

@ azlan88, thanks for sharing. Quite impressed by your grasp of details. By the way, how much is the cost of hiring Samsung C&T to complete the superstructure? Just trying to project the cost (and profits) of building Star Residences. Also, how do you derive the profit for Residence Tower 1 to be RM50.0M? Care to share? And yes - the JV with UMLand is a 50%-50% JV. Looks like the profit will be split 50-50.

It seems Star Residences will be the flagship for SymLife for a few years to come. How about their crown jewel - the Sungai Long land? What is the update on the state government land acquisition for the Sungai Long Land for Langat 2 project?

Sandisk, Seagate (which occupies the land previously reserved for Robert Bosch solar), HP, Bose, ...these are some of the big MNCs coming into Batu Kawan....

@ Tornado, just checking with you , 3M is opening a factory at Batu Kawan?

Hi Miapancho, i do not intend to sell any of my OR. But i intend to buy other people's OR.

Hence, after purchasing other people's OR, does it give me their rights issue + free warrants?

just asking, what happen if i purchase the OR? Then, this means, i am entitled to subscribe to the rights issue + getting the free warrants?

@ azlan88, just a stupid question. Concerning The Star Residences, noted that the builder is actually Samsung C&T. What does that mean? Does it mean that SymLife is the master developer and then they sub-contract the building works to Samsung C&T? If that is the case, what is the role of SymLife? Also, since this is a JV between UMLand and SymLife, how will the bill for Samsung C&T being split between both of them? Just curious....don't really understand how construction really works....

http://www.thestar.com.my/Business/Business-News/2014/11/29/Alphine-Return-bullish-about-project-Good-response-to-Star-Development/?style=biz

what is the expected price of the OR?

what is the meaning of enterprise value?

what do you think is the appropriate PE for property construction/ developer like GOB?

thanks Justin Ngo. Another question. How do we determine the PE Ratio? normally, people will just hentam 4 , 5, 6, 7...any logic behind these numbers (of 4,5,6,7...)?

Hi all sifus...may i ask one question about P/E ratio.
Referring back to Icon8888's article:
http://klse.i3investor.com/blogs/icon8888/50872.jsp
In his article, he stated that the EPS from Damen should be RM0.417 (i.e.; 41.7 cents)

Assuming, if EPS = RM0.30 (30 cents) and we fixed PE at 6.0

Then, we all say - Price = 6.0 x RM0.30 = RM1.80

The problem now is the definition of EPS.

Do we look at quarterly EPS/ yearly EPS/ the cumulative/ retained earnings as part of EPS? I mean how do we define EPS and how this will affect the pricing of the share based on PE ratio?

just have a quick look at their quarterly results. Despite the smaller amount of revenue, gross profit margin is still sustained at 30%. Majority of the net profit comes from disposal of CESB.
I concur - the drop in revenue is worrying. Anyway - management commentary was saying that unbilled sales is expected to improve in the middle of the year. Any other explanation? Need to dig deeper. I think the reason is due to the delay in projects.

As at 30 September 2014, total unbilled sales was approximately RM196 million and is expected to increase significantly when the 3 new projects namely TWY Mont' Kiara, Desiran Bayu in Sri Rampai and Tijani Raja Dewa in Kota Bharu are launched in the second half of FY2015.

maybe can break RM0.90 given this one last hour

today, can easily shot past RM0.90 line but selling pressure is too great. It seems people are dumping this share to avoid subscribing to the rights.

come on....company is going through rights issue - will surely release good quarterly reports - to entice you and me to subscribe...i got a feeling today's price will still be the same as yesterday