I have been following Gadang since September 2015 & decided to accumulate this stock.
The reasons I invested in this company were as follows:
1. Capital City Project (estimated net profit = 220m & company market value = 310m)
2. Outstanding construction order book = 875m @ 30/10/2015 (profit margin = 10% & enough to busy next 2 years)
3. Unbilled property sales = 189m @ 31/5/2015 (excluding capital city project)
4. Good history in successfully getting jobs in MRT & from Petronas (most important, delivered with good profits)
5. Prudent & Sound Management (old school business man)
6. Cash in hand (31/5/2015 @ RM232m & increase every year since 2012)
7. Debts to equity = 50.7% (borrowing = 193m)
Most importantly, the rolling PE ratio is still below 6! (Price RM1.90 @ 4/12/2015)
(All profits in accounts were actual operating profits, no gain on forex or fair value in investment properties, OR disposal of something like others)
Subsequently, the Company had accepted the Pengerang Package 2 Project with contract value of RM375M from Petronas on 21 October 2015. This was good suprise & this news had really pushed the price up since then.
Based on my own calculation, my price target for Gadang is RM2.50 (refer to Table 1 below), representing potential upside of 32.8%.
My calculation & assumptions may be wrong & I have to confess that I am not professional analyst, you are freely to disagree my projection.
My presentation here are merely for sharing & reference purposes only.
Table 1: 4 years average & Price Target
Note: Please refer to Table 5 for how to obtain average 4 years' historical PE ratio.
Table 2: Profit Estimation for FYE 2016 (based on Q1 result)
Table 3: Movement in Construction Order Book
Note: CFO Ms Kok had announced in 2015 AGM that Construction Division still have a total of up to RM875m orderbooks till-date (19/11/2015). (Please read here for more details: AGM 2015 updates 嘉登控股 股东大会 2015 by Zefftan)
I can't really get the amount as announced in AGM & please help to point out which part I may have gone wrong in the calculation. Thank you in advance.
Table 4: Comparison on Q1 2016 & 2015
Table 5: Financial information based past 4 years' audited accounts
Declaration:
I have interest & own shares in this company.
All the above are merely presented & written for sharing, educational & reference purposes and does not constitute as recommendation to purchase/buy or sell. You should make your investing decision based on your own judgement & at your own risk.
I will not be responsible nor liable for your action.
GADANG (9261) - Gadang Holdings - A New Rising Star 建筑股新宠儿
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