Posted by james70 > 2014-04-30 13:55 | Report Abuse

Domain Resources, a wholly owned sub of Malton was appointed the contractor for DaMen. Refer to the 2 ARs.

Posted by Alphabeta > 2014-04-30 14:20 | Report Abuse

Construction costs could be in early stage, don't forget the land costs which form a sizeable chunk of the overall development cost (47.8%). The % of completion based on actual dev cost over budgeted dev costs could be much more than the physical construction progress. In accounting treatment, progress billing to customers can fall behind profit recognition.

Based on the FY13 chairman report, the sale take up rate of service apartment already hit 95%. Hence, the revenue and profit recognized in the earlier years depend on the sale take-up rate then.

Posted by Alphabeta > 2014-04-30 14:21 | Report Abuse

There could be interest costs capitalized as development costs.

Posted by Alphabeta > 2014-04-30 14:33 | Report Abuse

If you refer to note 8 of FY 13 annual report, the total interest capitalized to development cost in the year was RM 23.45mil, RM 19.6 mil was imputed on interest free financial liability - landowner’s entitlement.

Posted by Alphabeta > 2014-04-30 14:51 | Report Abuse

GOB construction segment profit contribution in FY13 and FY12 were negatives. Only in the recent Q3 (31/12/13), the segment contributed positively at RM 2.3 mil and this represent a miserable 3.2% profit margin.

Posted by Icon8888 > 2014-04-30 14:54 | Report Abuse

Alphabeta, what is the conclusion ?

Posted by james70 > 2014-04-30 15:09 | Report Abuse

GOB was completing the low cost component of the Batu Kawan projects which could explain the poor or negative margin in 2012.

Posted by kancs3118 > 2014-04-30 15:40 | Report Abuse

@ James70, i believe the low cost component in Batu Kawan that you are referring to belongs to the "abandon" housing projects left over by Equine Capital (under Patrick Lim).

In the future, GOB also needs to commence building its obligatory LMCs (Low Medium Cost). In the scaled down model in GOB's Batu Kawan sales gallery, these are the flats and apartments. Construction has not commence for this portion. I don't think there are any landed terrace houses for the LMCs - which should be good because revenue yield per square feet will be higher this way.

Posted by james70 > 2014-04-30 16:06 | Report Abuse

The LMC homes obligation have been fulfilled as I understand having spoken to the sales person when I visited the gallery on 12Apr. Those homes are not the flats and apartments you are referring to.

Posted by Alphabeta > 2014-04-30 16:24 | Report Abuse

At current price, GOB prospective P/E in FY 14 already at 7.11 times compared to last year 3.75 times. With marginal improvement in EPS (14.22 sen per share), P/E multiple revaluation was not due to fundamental.

Fundamental has to catch up to justify the higher P/E. Though price to book is 0.84, there is no dividend payout for the last 2 years.

If you compared this with Hua Yang even though it’s EPS is expected to come down, it is around 28.5 sen per share. At current price (reduce price), its prospective P/E is 6.64 compared to last year 4.95. Its dividend yield is around 7%. Price to book is around 1.38.

You can also check counters like Daiman, Glomac, Crescendo etc with comparable P/E. These counters have good dividend yields.

Unless GOB has exciting development up their sleeve in the next few years that yield better profit margin, any further upside in price will not be justifiable. It needs to have more strategic land bank like those in Batu Kawan that you have mentioned in earlier posting. Its land held for development is just too small to give longer term earning visibility.

Posted by Alphabeta > 2014-04-30 16:26 | Report Abuse

What i meant is longer term earning growth visibility. Let said double the current EPS in the next 5 years.

Posted by Icon8888 > 2014-04-30 16:36 | Report Abuse

Thanks Alphabeta for your view. Huayang is indeed a good company. So are Daiman, Glomac and Crescendo

Posted by james70mother > 2014-04-30 17:06 |

Post removed.Why?

Posted by james70mother > 2014-04-30 17:07 |

Post removed.Why?

Posted by james70 > 2014-04-30 17:24 | Report Abuse

you are the owner of your actions rich_trader=OneMillion and ultimately your karma. you'll reap what you sow.

Posted by james70father > 2014-04-30 18:21 |

Post removed.Why?

Posted by james70father > 2014-04-30 18:22 |

Post removed.Why?

Posted by Icon8888 > 2014-04-30 19:09 | Report Abuse

how come today nobody attack me ? jokers ? adam ? chong ? jumbo ?

Posted by Chong8206 > 2014-04-30 19:20 | Report Abuse

Stay in ur house I won't attack lah.......

Posted by Icon8888 > 2014-04-30 19:47 | Report Abuse

ha ha sian already ? no kick anymore ? told you already not sustainable...

losers..

Posted by Chong8206 > 2014-04-30 19:52 | Report Abuse

Ya lor how haiiii ahhh???

Posted by Icon8888 > 2014-04-30 19:55 | Report Abuse

ok jennywong i checked your postings, It seemed you are a genuine investor. So I am happy to answer your question

Are you referring to GOB ? I would not want to suggest a target price (always get people into trouble)

but I dont mind highlighting that they made 30mil last year, and in 2015, based on my calculation, they potentially can make RM100mil from Damen service apartments / office component

I will leave it to u to imagine how high it can go. Does that make sense ?

(but first of all, we need to establish that 100 mil profit from damen is indeed achievable. Which for me is still a hypothesis waiting to be proven. So please dont blame me in the future if that kind of profit is not achieved. I have done my best to be 100% transparent by laying out the calculation for everybody to examine and challenge)

Posted by Chong8206 > 2014-04-30 19:57 | Report Abuse

Hello What is damen take up rate??

Posted by Icon8888 > 2014-04-30 19:58 | Report Abuse

95% and 98% respectively

if you are literate

Posted by Icon8888 > 2014-04-30 20:03 | Report Abuse

GOB better announce good result this quarter. Otherwise you wont see Icon in this forum anymore, he would have gone into hiding

(even though he never mentioned next quarter is good, the crowd won't care, they will still crush him)

Posted by Icon8888 > 2014-04-30 20:06 | Report Abuse

end May

all PLC must announce their result within two months of accounts closing, and their closing is 31 March

Posted by Icon8888 > 2014-04-30 20:07 | Report Abuse

Mr Chong, how come dont attack me ? where is your buddy adam, thambi, saturn and jumbo ?

Posted by Icon8888 > 2014-04-30 20:10 | Report Abuse

jenny, I wish you all the best. If things turn sour (touch wood) and you feel bad, please think of icon. He has three lorries of GOB, so he will suffer most

then you will feel better

Posted by Chong8206 > 2014-04-30 20:14 | Report Abuse

It's ur house mah.....u already kena what you deserve as I see in all attack.

Posted by Icon8888 > 2014-04-30 20:16 | Report Abuse

boring...

Posted by Alphabeta > 2014-05-03 10:51 | Report Abuse

Dear Icon8888, i appreciates your passion and untiring effort to unearth an up and coming property developer. Beside the financial numbers published in the annual report, i have done some research on the property development costs. I am interested to invest in GOB, before that there are still some questions which i would like to raise with you concerning the property development costs and the methodology of developers lock in sales, recognizing revenue and profit, progress billing to customers in stages and its impact on cash flow.

Answers to these questions cannot be found in annual report.
a> Land Cost, does this include the stamp duty & legal fees (normally around 1% of land cost), pre-development expenses.
b> Professional fees, like Architect, M&E, land & quantity surveyors etc..
c> Sales & Marketing expenses plus developers' overheads.
d> Contribution to authorities for plan approval, sewerage & sanitary, water & electricity connection etc..
e> Is your construction costs comprised only earthwork, piling & building (foundation & superstructure works), how about infrastructure works like internal roads, drainage, water reticulation/pumps, fire fighting, sewer reticulation, telecom manhole & cabling, street lighting, electrical & water supply, main reservoir/water sumps, sewerage treatment plant, landscaping etc).

The common costs such as land, infrastructure costs are allocated by estimated revenue to be generated from the respective products.

Sales revenue is recorded but billing to customers is based on stages of progress to be certified by architect, such as 10% upon signing S&P, maybe another 10% upon completion of earthwork, foundation etc... Hence, lock in sale is completed only with S&P being signed. Then 1st stage of progress billing can proceed before monies start rolling in.

Recognizing of revenue & costs in based on two things:
a> the ascertainment of estimated profit (revenue minus costs)and this must be revised from time to time as development progresses.
b> the ascertainment of % of completion (actual development cost/budgeted development cost), if 10% of progress is achieved on cost basis, then 10% will apply on the sales revenue lock in and the associated budgeted costs.
In the service apartment case, if only RM 100 mil sale revenue out of the RM 500 mil total estimated GDV as the point of recognition. Then only RM 10 mil will be recognized as revenue.

Developers' ohds and marketing are recognized as periodic costs and cannot be capitalized and to be charged out immediately.

The computation is quite complex and based on a number of parameters. I can create the excel template but unless you have a ballpark figures on those parameters, it is fruitless exercise.

Posted by Icon8888 > 2014-05-03 11:46 | Report Abuse

Dear Alphabeta, I remember your earlier participation in Uncle Koon's write up on Mudajaya, which you also went into details on the various aspects of the business.

Unfortunately, I neither have the expertise nor access to information that can help you to build up the model before you take a plunge into GOB.

I guess we have very different approach when come to investing. I am the kind of person who put my money in a stock once I figure out the broad details, which is apparently different from your style

Back to GOB. I have put big money in GOB. However, I don't know whether the RM150 mil net profit that I described in Part 8 can really materialise. There are many factors in play : I could have got the timing wrong by 6 to 12 months, I could have got the construction cost wrong by 100 mil to 200 mil. I could have mis-interprete the GDV figure by 100 mil to 200 mil, etc.

In other words, I could have got a lot of things wrong (but I might not have got them wrong, after I posted the articles, so far nobody has been able to pinpoint any fatal mistake, which I will be very keen to listen to, if any).

But I still feel very safe.

The reason is because I don't need 150 mil net profit next year to protect my investment. GOB made RM30 mil last year. Their market cap is only RM250 mil now. Even if the Damen project only turns in additional RM30 mil next year (instead of RM150 mil), GOB would have grown its profit by 100% to RM60 mil. That would translate into PE multiple of 4 times.

Can you see the logic why I don't bother to get bogged down by the details ?

But of course, you are entitled to look at things differently. You must be comfortable with the theme before you put your money in. Nothing can replace that.

I fully respect your decision to dig real deep. But unfortunately, I don't have the resources or expertise to assist you.

I apologize

Posted by jennylim > 2014-05-03 11:49 |

Post removed.Why?

Posted by Icon8888 > 2014-05-03 11:59 | Report Abuse

jenny you didnt go shopping meh ? why everyday stick to the computer ? you must have a real big portfolio

kaka

Posted by Icon8888 > 2014-05-03 12:00 | Report Abuse

I am busy blogging. Writing an article on Crest Builder

Posted by Icon8888 > 2014-05-03 12:09 | Report Abuse

wah you so rich

i stay in jinjang

i am a jinjang analyst

Posted by Icon8888 > 2014-05-03 12:11 | Report Abuse

i thought CB belongs to Yong family ?

Posted by jennylim > 2014-05-03 12:13 | Report Abuse

front only.

Posted by Alphabeta > 2014-05-03 14:10 | Report Abuse

Earning growth prospect of a business depend very on the robustness of the industry and the ability of the business entity to capitalize on the market trend to drive revenue, control costs and manage its working capital well.

Volatility of share price can be temporary driven by news (good and bad) but the long term growth prospect still need to be supported by fundamental.

Fundamental like sale volume and sale price, ability to control unit cost will determine revenue growth and profit margin. Beside these, good management of working capital and efficient utilization of assets improve Return of Equity.

Question of positive free cash flow and economic value added are cornerstone of successful businesses which will continuously add shareholder value in the long run and increase dividend payout.

Mudajaya financial strength is still intact but its growth prospect is lacking due to depleting order books and its uncertain fate of the Indian Power Plant return on investment (it will be lucky if they can get back their investment capital plus some profit). That's the reason for its low valuation.

I am still confident to invest (though not a lot) in Mudajaya in view of its past performance and undemanding P/E compared to others in the same industry. It will move once it secures big ticket job and improve its order books.

I do not select stock based on short term capital gain, more for dividend yield and long term sustainable earning growth with capital gain.

I will take profit if the price move too far from fundamental in short time and drive the valuation into unrealistic level.

There is no hard and fast rule in investment, there are successful traders who invest purely based on technical analysis. I prefer to base on fundamental and the management ability to drive value for shareholders.

GOB has showed sign of improve earning but still need to know how it can drive higher earning growth without positive free cash flow and more borrowings.

Who knows, Icon8888 may be the early bird that catch the worm. I wish all the best to you. Will not bother you anymore since we have different approach.

Posted by jennylim > 2014-05-03 14:16 | Report Abuse

too much of number crunching not suitable for trading stock....

go study why john keynes bankrupt investing in stock mkt.

stock market is a discounting mechanism, the details in numbers and cash flow etc will take care of themselves as long as the direction is correct. i m in favour of icon method. less number, more concepts.

Posted by jennylim > 2014-05-03 14:19 | Report Abuse

alphabeta, if wallstreet trader or investor think like u, nobody would buy facebook, google when they listed. nobody even dare to underwrite them.

Posted by jerome888 > 2014-05-03 14:21 | Report Abuse

Jennylin the coke talk. Steal ideas of others talk coke as if so pro.

Posted by duatlai > 2014-05-03 14:50 | Report Abuse

Yongtai bhd is heading back to where is begin

Posted by Icon8888 > 2014-05-04 08:03 | Report Abuse

Duatlai, based on my experience, usually that means a substantial portion of upside had happened

Rights going ex is a high profile event. The creation of OR will attract attention of a lot of short term traders. They will move in to try to take opportunity to profit. Meaning during that period of time, almost all profit would have been squeezed out of the stock

My personal view only. If u want to wait for OR and WA, there is nothing wrong with it also, especially if you are a long term investor

Posted by MrNobody > 2015-07-01 22:34 | Report Abuse

Blog: (Icon8888) Global Oriental Bhd (Part 8) - Sticking My Neck Out
Apr 30, 2014 07:55 PM | Report Abuse

ok jennywong i checked your postings, It seemed you are a genuine investor. So I am happy to answer your question

Are you referring to GOB ? I would not want to suggest a target price (always get people into trouble)

but I dont mind highlighting that they made 30mil last year, and in 2015, based on my calculation, they potentially can make RM100mil from Damen service apartments / office component

I will leave it to u to imagine how high it can go. Does that make sense ?

(but first of all, we need to establish that 100 mil profit from damen is indeed achievable. Which for me is still a hypothesis waiting to be proven. So please dont blame me in the future if that kind of profit is not achieved. I have done my best to be 100% transparent by laying out the calculation for everybody to examine and challenge)

Posted by paperplane2 > 2015-07-01 22:59 | Report Abuse

Neck? Tot little head

Posted by MrNobody > 2015-07-01 23:08 | Report Abuse

I will leave it to u to imagine how high it can go. Does that make sense ?

Posted by MrNobody > 2015-07-01 23:16 | Report Abuse

Hundreds of years ago, Galileo said that the earth revolved around the sun and he got into trouble. But that doesn't mean that he was wrong.

Sometime when you are faced with compelling evidence, do you have the courage to stick your neck out, disagree with everybody else and defense what you believe is possible ?


Based on the above model, GOB will recognize RM159 mil net profit for the development project in 2015.



Dear readers, that is a figure that even Galileo might hesitate to stick his neck out to support. Just imagine how stressful it is for me to write this article.

Posted by MrNobody > 2015-07-01 23:17 | Report Abuse

5. Concluding Remarks



No analyst has ever suggested that GOB will have the potential to report such windfall gain in the immediate future.



Have I made any mistake in the calculation (assumptions, facts, mathematics, etc) ?



Or am I just being one step ahead of others ?

Posted by icon8888 > 2015-07-01 23:37 | Report Abuse

GOB is a screw up. Until now I still don't know what went wrong. : p