co still hv land abt 8k ha in Indonesia and less than 500 ha in Sabah....looking at 12/2014 financial statement ...borrowing non current liabilities 88m and current liabilities 88m total bat 176m , equity reserves rm421m....I think at this level can take some position
All worries about the PN17. However, it should not fall under PN company because the land bank in Sabah and Penang still under the control of Golden Land. Just wonder how they calculate the gain from the disposal with only RM0.07 per share? The company do not propose any dividend distribution from the disposal. Based on simple calculation, the total borrowing is RM 150 million, and after disposal, the net cash will be RM505 million. Cash per share will be around RM 2.50. Even just 10% of RM2.50 as dividend will be 25sen.
Joel, as per the announcement, the land at Penang around 20 acres is not part of the disposal. Just the dividend whether how much they want to declare is totally out of our control. I think the calculation of the disposal taken into the consideration of revaluation reserve. That is the reason why the gain from disposal only 7 sen but the announcement by them about the cost of investment was around RM125 million for the 4 subsidiaries.
No worries. Based on listing requirement, Golden Land will not be fall under PN17 company as the property segment still able to generate revenue. Until end of the month, it will reveal how much they want to declare as special dividend as the financial year end is 30 June.
Without going into the details.... First impression is...
What the hell is the whole idea?? So many companies and lands involved and looks like pretty troublesome.... but profit only 15.23m and later have to tie up the loose end of PN 17 bla bla... no wonder dropped 16%...
Profit only 15.23m... what... the management very tired of running the group already is it?? Surendder??
Reason why there is "only" a profit of RM 15.23m is because there was some substantial (I think it was over RM300+ million) revaluation reserves under their equity which is then transferred into retained earnings. What this means is that it has converted RM 300+ mil from paper gain from properties to real cash.
Put it a different way, if the management did not revalue its lands and it sold its business today at the same offer, it would have profited RM 300+ mil plus another RM 15.23m. Hope that explains =)
I'm surprised the market sold it heavily over this good news. I do hope I made the right call today though... made quite an entry today. *fingers crossed*
Bricks has explained it well.. There are two different accounting treatments to land in terms of its value.
You can choose not to revalue, and when you sell it, you net profit in the end. On the other hand, if you choose to revalue, it is directly transferred into Equity in the revaluation reserve. Well this does not go through the profit and loss therefore no "profit" however, shareholders benefit through paper-gain. Eg. increase in Net Asset per share.
Either way, the gain will be realised. This is good. And i see that as an indication the other land held by the group should be revalued. Now (1.6) should be a good entry point. I dont see how much further it can drop.
also to explain why this company might enter PN17- it has mentioned in the company's statement that if it receives this much cash at a go, this will breach the threshold in PN17, which states a company with cash more than 70% will be a cash company- technically no core business and should therefore be suspended. Yes once sold 655m is more than its market cap. This is crazy. More further upside hopefully! management utilise the cash properly!
this is the trick by the management to lure the speculators. Only those fundamentalists will notice the retained earning increased so significantly after the disposal. Post disposal RE 419,391 minus RE as at 31.03.2015 (74,418) = RM 344,973 which is equivalent to RM 1.55 per share. This can be distributable as special dividend or bonus issue. Put it another explanation, if the company do not want to fall into PN17 status, they can carry on capital reduction by giving out the cash as special dividend more than 30% on the proceed.
GLD is selling off all its core sources of income... way too very very big part of its business
Post disposal it will have no meaningful income except interest from FD....
Say special dividend 0.50 so at 1.50 you cost is 1.00
Ya NTA still 2.50 but you can see but can't touch as new planting needs money need time... property development needs money need time... maybe need time is even worst
So you are paying 1.00 for a company that only have interest from FD....
Interest from FD.... How much value you give to this? Is it a good deal to pay 1.00 for it??
So the situation is you are investing 1.00 in a company with 2.50 NTA but with no business income for at least 3 4 5 years...
Ya rMoi, this disposal will bring the company to have no business income for the next few years. Yet, the land held at Indonesia about 8,000 acres need takes time to replant back and Gland need to re-build back it fundamental. However, the purpose of this disposal was given the opportunity to unlock and realized the asset. Currently, the palm oil price is around 2000-2300 per tonnes. The company with existing land bank only able to generate 60,000 - 70,000 tonnes of palm oil per year. Let's assume 5 years with profit margin of 20% on CPO and based on CPO price 2,200 = 70,000 tonnes x RM 2,200 x 20% x 5 years = RM 154,000,000. It only 23% of the proceed, which mean if Gland do not go thru the disposal, it will need to takes 20 years only able to get this RM655 million.
Do you want to invest for 20 years for Gland or do you think to invest a company with the present cash value in 20 years time. Up to all to make the decision.
Post sales of asset, GLBHD will have net cash of RM 2.1. No company will ever trade lower than their cash position. The risk is not whether GLBHD will distribute the cash or how GLBHD will invest, but whether FGV will pull the deal back.
Whether FGV will pull the deal back or not is totally out of our control. The current situation is market sentiment worried about PN17 status, if pull back the deal it will go back to the price prior to announcement. But from this exercise, we can see that the management looks like do not want to continue with the business. If the deal void, they will certainly look for new buyers who are interested to expand their business in Plantation.
rMoi, this is just based on the simple calculation, assume Gland sell 70,000 tonnes of oil palm per year and the oil palm price around RM 2,200 per tonnes. Each year the revenue about RM154 mil. And then based on the revenue of RM 154 mil, we treat this counter has 20% of Net profit margin each year and generate 30.8 mil profit. It will need to take 20 years in order to realize the RM655 mil. This argument is just based on simple calculation. Besides, all the land under this disposal plan are leasehold land and average expiry date is around 2075. Mean around 60 years left.
I dun have problem buying into the company at such reasonable price now to enjoy the potentially high net cash nta of rm2.1 per share besides another rm1 per share of other tangible assets. Even in the extreme scenario of the company distributing all the cash i.e. rm2.1 per share & strike a deal with a suitor for RTO on GL Bhd(if the management is tired already)… what is the complaint? :))
One just got to decided whether one is interested in this value gain play, forget about the growth issue. Realising the tremendous nta value of the company which may take more than 20 years to earn(not factoring in NPV) is fantastic deal!
...... this counter has 20% of Net profit margin each year and generate 30.8 mil profit. It will need to take 20 years in order to realize the RM655 mil.
riskabsorber
In 1 year GLBs value will be... 30.8 mil + RM655 mil.
In 20 years the value will be... 20 x 30.8 mil + RM655 mil.
rMoi, this argument is merely for the purpose to calculate if Gland do not sell the 4 companies. It will need to take 20 years to generate the profit. Taken away the NPV factor because just simply assess the value of the disposal and reject the offer. Post disposal, Gland will only have RM 655mil with its 3.5% - 4% FD interest. But most of the companies which like C.I Holding, Jobstreet, after disposed the core business, the management are capable enough to re-build the fundamental with the proceed. RM655 mil invest at 3.5% FD will get 23mil per year to cover the expenses yearly about 25mil. If the company do not want to continue the business in any sector, what is RM655 mil can be done ?
Gland need to come out regarding the future prospect on the company. Since there is the worries about the PN status. The special dividend will be just a bonus. Company prospect is more important as how the management able to transform and use the cash proceed effectively. If the special dividend are given too high, it will jeopardize the company performance at the future.
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MQ Trader 3169 views | 3 d ago
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New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Lewes
23 posts
Posted by Lewes > 2015-06-09 12:21 | Report Abuse
Now dropped back so much at 1.63 Any one can advise what price is worth buying?