Posted by kancs3118 > 2014-11-07 18:05 | Report Abuse

@ CAF POW; just asking about the warrants/ options. Given the exercise price is at RM0.80 which is 5 cents delta to the TERP; RM.075. Hence, when the price of the mother share is at RM1.00, we can say the option is in the money. Hence, the price of the option should increase, right? But then, increase by how much to the listing price?

What is the listing price of the options? Any ideas?

Posted by Icon8888 > 2014-11-07 18:08 | Report Abuse

According to circular, NA per share post rights will be RM0.80

Posted by kancs3118 > 2014-11-07 18:19 | Report Abuse

@ icon8888, thanks for your fast response...but i cannot find the latest (november dated) circular at bursa. Just asking, have they post it up there yet? Thanks for your patience, as usual.

Posted by CAF-POW > 2014-11-07 18:38 | Report Abuse

kancs3118, sorry not sure what's your question actually....
you mean if mother price becomes RM1.00 what will the possible warrant price? If that's the case, assuming warrant trading at 20~30% premium (normal for warrant with 5yr expiry), the warrabt could trade at 40 to 60 cents but bear in mind that.....post rights, the price of mother share would trade close to TERP, so it will take awhile to go up to RM1.00. If you have holding power it's not an issue.

Posted by Icon8888 > 2014-11-07 18:50 | Report Abuse

The only circular is the one dated august

Posted by jkhoo99 > 2014-11-07 19:55 | Report Abuse

What can you do with the rights? I understand that you can convert a warrant to a share at a price of 80cent. But there is no information about what and when you can do with the rights. Enlighten me please.
Otherwise it seems to me I am paying 50c x2 for two rights to get 1 free warrant and then pay 80c to convert to a share. That is a total of 1.80 for a share...

Posted by watchme > 2014-11-07 20:35 | Report Abuse

simple calculation:
your investment at current price say RM1, you can subscribe 1 right issue at 50 cents, so 2000 shares = RM 1500 capital, divide by 2 = RM 0.75/unit

one free warrant for 2 rights subscribe, the warrant price likely to open at 15 cents, why? because exercise price is 80 cents, if you exercise and convert the warrant to mother shares, the cost is 80 cents + 15 cents = RM 1, where current price if RM0.75...in this case, the warrant is out of money

however, when the mother shares goes higher, say RM 0.9 one day, the warrant is "IN Money", because you pay only 80 cents extra to convert to mother shares...when the mother shares is 90 cents, the warrant is likely to trade at 25 cents to 30 cents....at least some premium..

Imagine when mother shares goes to RM 1.5 one day, the warrant will be worth a fortune !!! at least 75 cents to 80 cents...

buy warrant if you believe GOB can deliver in 2 to 3 years time....a good chance to turn you capital to 2 to 3 folds within 3 years

I will need more capital t buy this counter :)))

Posted by jkhoo99 > 2014-11-07 21:23 | Report Abuse

since the right is renounceable/trade-able, does that mean the current shareholder will be allotted the rights (no payment yet) for a certain period of time and these could be traded on the market until the closing date before the holder have to make the 50c payment?

I used to know all this but not very sure anymore. So if that is the case has the company announced anywhere about the date of right subscription?

Appreciate any Sifu to point out.

Posted by kancs3118 > 2014-11-07 21:33 | Report Abuse

@ watchme, thanks for your explanation. Do you need to pay a conversion premium when converting the warrant to mother share? If yes, how much is the conversion premium?

Posted by watchme > 2014-11-07 22:00 | Report Abuse

just pay 80 cents to convert for one unit, 1000 shares, pay 800 RM

Posted by kancs3118 > 2014-11-07 22:19 | Report Abuse

what happens if you buy the warrant from the open market? Say if the warrant is trading at RM0.20, how much do you need to pay to convert the warrant to the mother share? Is it RM1.00?

Posted by watchme > 2014-11-08 09:32 | Report Abuse

Kancs,

buy open market, pay extra RM 800 for 1000 shares, your cost is RM 1 k if you buy warrant at 20 cents, normally, when the expiry date is still far away like 3 to 5 years, the warrant will price with premium, such as mother shares trading RM 1, warrant will be 30 plus cents or even higher if mother shares has potential to increase in price in future

Posted by watchme > 2014-11-08 10:37 | Report Abuse

almost sure win in 1 year time...when mother shares traded back to RM 1 from 75 cents after right issue...the warrant may worth 35 to 40 cents at least..so if warrant open at below 20 cents, it is a good buy....

Posted by kancs3118 > 2014-11-08 22:45 | Report Abuse

@ watchme, thanks for your answer. This means, if the warrant is trading at RM0.20 and the exercise price is RM0.80, hence, if i buy 1x warrant and intend to convert the warrant to shares, i will need to pay RM1.00.

Am i right?

Posted by watchme > 2014-11-09 10:09 | Report Abuse

you buy warrant 20 cents, add 80 cents conversion price, total cost Rm 1.

Posted by Rich118 > 2014-11-09 10:13 | Report Abuse

Icon8888, good morning. I am convinced of your investment case for GOB. Bought some last week, and thinking of buying more.

Hope to get some clarifications from you on the Financial statement from the latest annual report (Aug 2014). I noticed that though it makes almost RM 39 million of net profit, the net cash flow from operating activities is Negative, i.e (- RM 76.58 million). Why does it so? Any serious concerns on this front given challenging property market ahead in 2015?

Thanks in advance for your guidance.

Posted by 宋 雪芬 > 2014-11-09 11:42 | Report Abuse

net cash has increased RM21,380,000, the report is continued in the next page

Posted by kancs3118 > 2014-11-09 12:19 | Report Abuse

@Icon8888, went through the Bursa Announcement for the disposal of 15.56 acres of land at Seri Kembangan.

Good news is that GOB still have about 108 acres of land intact at Seri Kembangan (52.0 acres + 56.1 acres). This is because the 15.56 acres that they disposed off is part of the the 19.6 acres held by Taman Equine Industrial S/B.

Posted by kancs3118 > 2014-11-09 12:41 | Report Abuse

@ Icon8888/ James70,
Don't know whether you guys can help me or not. Just went through the maths behind the disposal of 15.56 acres.

I derived the COST price per square foot = RM84.30 (approximately).

Disposal Price = RM142.35M
Gains arising from disposal = (RM85.22M)
COST price of land being disposed = RM57.13M

COST price per square foot = RM84.30 (approximately).

Why is this higher than the NBV price per square foot in the Annual Reports of RM28.60 per square foot?

Posted by Rich118 > 2014-11-09 13:31 | Report Abuse

雪芬, that's different. What you meant by net cash increase in the next page is because it draws down RM 178 million from bank borrowings. What I meant is the net cash from operating activities which is negative and my worries. I am still awaiting Icon8888 to shed some light on this as I am sure he know much better than us. Icon8888, thanking you in advance.

Posted by kancs3118 > 2014-11-09 14:08 | Report Abuse

@ Rich118, Hopefully, i can help you on this matter. If you refer to James70 posting on Aug 1 2014:

"If we look at the 2014 Annual Report, their focus right now is to finish DaMen (44% completed), Galleria (12% completed) and Springville Residence (21% completed). These 3 projects with a GDV of RM1.54B and Gross Development Cost of RM1.285B are in the initial to mid stages and will complete for 2015 save for the Galleria."

What this means is that for 2014, there is a decrease in progressive billings which ultimately reduces the cash inflows generated from operating activities by ($82.6M). This is consistent with the reduction in property development cost by $24.9M. Rest assured, when both DaMein and Springville is completed during 2015, the progressive billings will hit 100% and this will further improve on the operating cash flows during 2015.

Another point worth nothing is the big ticket item being the purchase of PNT of RM50.0M. Hence, GOB actually needs to draw down big time on their bank borrowings of $178.4M during 2014. I think they have taken this into consideration when disposing the 15.56 acres of Seri Kembangan land and the rights issue pending from shareholders.

In conclusion, this means the increase in the cash and cash equivalents at the end of the year is mainly due to a huge reduction in the operating cash flows (reduction in progressive billings) and an increase in the investing cash outflows (to finance PNT) which resulted in a need to draw down on their bank borrowings.

Posted by Rich118 > 2014-11-09 14:36 | Report Abuse

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

Posted by Rich118 > 2014-11-09 14:37 | Report Abuse

Sorry, I mean @Kancs3118

Posted by ttgipoh > 2014-11-09 14:38 | Report Abuse

what is the price of OR if TEAP is 0.70

Posted by ttgipoh > 2014-11-09 14:40 | Report Abuse

if the OR is .30, will u recommend buy?

Posted by Rich118 > 2014-11-09 14:42 | Report Abuse

@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

Posted by Rich118 > 2014-11-09 14:42 | Report Abuse

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

Posted by kancs3118 > 2014-11-09 14:59 | Report Abuse

@ Rich3118, property developers actually recognize revenue by progressive billings. They cannot recognize the revenue all at one go, but rather to recognize revenue by stages via the Architect Certificate of Completion.

For example, earthworks and piling will normally be the first 10%. (If not mistaken, this is the slowest part of the construction project because they are literally laying down the foundation). Hence, by completing this 10%, the banks will release 10% of the monies to the developer and the developer can recognise 10% of this revenue.

It is no different than buying a house from a developer. Normally, at the back cover of the S&P agreement, there is a chart of progressive billing whereby the bank will release the monies to the developer based on the progressive stage of completion.

I believe what happen during 2014 is that most of the projects have already matured, resulting in a significant drop in progressive billings (compared to 2013). During 2014, GOB is actually focused on DaMein and kick start the Galleria (12% completed during 2014) and Springville Residence (21% completed during 2014). We expect to see these three projects to mature during 2015 and this will bring about very high progressive billings which will in turn improve the operating cash flows.

Credit to James70. I got this data from James70 and he is very hands on with his investment.

Posted by kancs3118 > 2014-11-09 15:02 | Report Abuse

@ James70/ Icon8888, please correct me if i am wrong in my explanation up there.

Posted by Icon8888 > 2014-11-10 10:00 | Report Abuse

Rich118, when reading a cash flow statement, you shouldn't just take the number at face value. When you see a negative net operating cash flow, you need to go one step further to find out what is the reason ? Take GOB's 2014 AR as an example : they reported negative net operating cash flow of RM77 mil. However, that was because they paid down their trade creditors by RM57 million (and also progress billing).

When I studied operating cash flow, I usually exclude the effects arising from working capital changes (receivables, payables, inventories, etc) because these items are "economically neutral" (for example : making payment to trade creditors does not make you gain or loss anything. It is a neutral event from economics point of view).

Based on my experience, when come to property development companies, usually cash flow statement is not a very important part of valuation. The steps are pretty standard : you buy land, you launch the properties, you pay contractor, you get paid by bank. As long as land cost is reasonable and sales are good, many things will automatically fall in place.

A manufacturing company is different. If the company needs to incur capex every year to sustain the same level of earnings, it usually means that they is something wrong with their business model (as they need to keep on injecting cash to keep the boat floating).

Posted by Icon8888 > 2014-11-10 10:01 | Report Abuse

kancs thanks for your input

Posted by watchme > 2014-11-10 13:14 | Report Abuse

so is GOB still good buy at current level?

Posted by kancs3118 > 2014-11-10 14:43 | Report Abuse

@ icon8888, just wondering, can you do a write up for SymLife?

Posted by Rich118 > 2014-11-10 15:06 | Report Abuse

Thanks Icon8888.

Posted by Rich118 > 2014-11-10 15:08 | Report Abuse

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?

Posted by Rich118 > 2014-11-10 15:12 | Report Abuse

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?

Posted by Icon8888 > 2014-11-10 15:14 | Report Abuse

Rich please refer to my posting for GOb and Paramount land location. They are essentially same place - Bandar Cassia

http://klse.i3investor.com/blogs/icon8888/50560.jsp

Posted by Icon8888 > 2014-11-10 15:31 | Report Abuse

Kancs I have written symlife before. Please check my blog

Posted by Icon8888 > 2014-11-10 15:32 | Report Abuse

http://klse.i3investor.com/blogs/icon8888/50533.jsp

Posted by kancs3118 > 2014-11-10 15:57 | Report Abuse

@ Icon8888, maybe something as through as GOB ? hahaha...like Symlife part 1 to part 10? hahaha....

Posted by Rich118 > 2014-11-10 23:11 | Report Abuse

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

Posted by Icon8888 > 2014-11-11 09:31 | Report Abuse

rich, regarding your comments on the selling pressure, sometime i wonder whether the previous owner (Patrick Lim) was the one doing the selling ? maybe he has a block that he is trying to clear completely ? since I started buying GOB back in March / April 2014, there has been consistent selling pressure (depressing the share price until now). I also asked the same question whether there was something hidden that we don't know ? But over time, I am beginning to feel that that is not the case as every time there is selling, it will be followed by some good news. The pattern is that somebody is selling irregardless of good news bad news.

But i am sure one day that selling will be exhausted

Posted by kancs3118 > 2014-11-11 10:30 | Report Abuse

@ icon8888, thanks for your input. Never thought about that one.

Posted by iska > 2014-11-11 10:57 | Report Abuse

Thanks Icon8888 for your write ups on GOB. I have monitored and bought into the counter. I also notice the quite heavy selling, as well as the "intentional" blocking in the queue numbers on the sell side now and then.

One reason for the constant selling could be that the stock is not tightly held by strong long-term shareholders. The top 30 shareholders own only 42% of the scrip, which points to the shares being held by small retail players, probably all over the shop.

From what I know, the co does not pay out dividend (correct me if I am wrong). Sometimes, even value retail investors need some kind of consistent dividend payout to hold on to their stocks for the long term. Otherwise, they will sell their shares when the price goes up a bit, as they need to turn their paper profit into cash to cover the lack of dividends. If, however, a company consistently gives me a 5% return, I am more likely to hold on to it even if the share price goes up, as I need not sell my shares to to "see" my returns.

This is my personal view, and is exactly how I handle my own investments in undervalued property counters in Singapore.

Posted by iska > 2014-11-11 10:59 | Report Abuse

sorry, "consistently gives me a 5% return"f should read "consistently gives me a 5% dividend yield"

Posted by watchme > 2014-11-11 14:04 | Report Abuse

waiting for selling n pick below 95 cents..:) n wait 12 months to hit 1.1 to 1,2..a very likely scenario when the qtr results are good

Posted by kancs3118 > 2014-11-11 14:23 | Report Abuse

come on....it was RM1.0x since Apr'14 until now....this counter (together with SymLife) really can test your patience to the limit.

Posted by Icon8888 > 2014-11-11 15:01 | Report Abuse

Watchme they are coming out with abridged prospectus in 3 days time, and the rights will be credited into accounts. Whoever that wants to buy, this is the time

Posted by kancs3118 > 2014-11-11 16:13 | Report Abuse

@ icon8888, how about those who want to sell ? can we sell the mother share once the rights have been credited into our accounts?

Posted by watchme > 2014-11-11 16:16 | Report Abuse

0.96 done...can go down ? or stable