GUNUNG (7676) - Gunung Capital Berhad: Just 3 Simple Reasons For You to "Hoot" Gunung
Gunung Capital Berhad (Gunung - 7676) should be a no stranger since my previous introduction in my blog entitled Gunung - Hydro Pumped. But of course, if you still do not know what is the business of Gunung, and future prospect of this company, here is a brief summary for your easy reference.
Basically, Gunung is engaged in land logistic chartering business, which provides buses to national services and several local universities. However, the future long term business will be the largest mini hydro renewable energy player in Peninsula Malaysia, with all the sites in Perak. Gunung will also be the master developer of all mini hydro renewable energy site in Perak through it's 51% effective stake in PHREC (Perak Hydro Renewable Energy Corporation).
Now, I would want to list down to you why you should get your position in Gunung before this counter explode above RM 0.50. Gunung had closed at RM 0.475 on 28th November 2016.
Here is a simple 3 reason for you to hoot Gunung into your portfolio.
Reason 1 - Selling Renewable Energy is liken to IPP
The first reason is there are still many retailer in the public that do not know Gunung had a change of business direction. Even if they know, they could had forgotten about this because this news is much highlighted then during 2013, 2014. Back then, the hype of the news is not backed with earning from the division. However, right now at the end of 2016 and going into 2017, Gunung already invested into the infrastructure, and these mini hydro are going to turn the inertia of the flowing waters that flows from the river stream in Perak into electricity, and then sells it back to TNB through a REPPA (Renewable Energy Power Purchase Agreement), which is then the revenue for Gunung.
While renewable energy do not come in a large scale like coal fire power plant which can generate capacity up to 900MW, Gunung is considered not bad after all, with installed capacity of up to 140 MW (according to Annual Report 2015). For 140MW, we are talking about RM 150 million in annual recurring revenue from PPA, now this is something commendable.
So, if TNB, YTLPower and Malakoff is so sought after by institution because of their defensive nature of revenue through generation of electricity, now Gunung is a company with multiple PPA with 21 years feed in tariff signed, right in front of you. What are you waiting for?
Reason 2 - Dato Syed Abu Hussin Took Position at RM 0.52
The second reason is based on major shareholder and executive chairman, Dato Syed Abu Hussin purchase price of RM 0.12 in Gunung warrant (Gunung-WB), I am definitely looking at him putting in RM 0.40 exercise price per share in the coming future to reap dividend benefits. That would priced his purchase of the mother share at RM 0.52.
With the price now being at RM 0.475, it would definitely be a good buy for a long haul.
Reason 3 - Gunung Break Out from Long Term Downtrend
The third reason is that Gunung had broken away from it's long term downtrend line after 2 years. This is something not to be overlooked as the break out is backed with the commencement of the mini hydro renewable energy.
While the break out can be accommodated by buying from institution, emerging market funds, syndicate or high profile investor, however, you must know that who is behind the break out is not a very important question.
The most important question is, are you inside Gunung during the breakout and uptrend?
While I had laid my 3 simple reason for you to see the future prospect of Gunung, the rest is up to you to decide.
Bone's short term TP: RM 0.60 (Upgrade)
Long term : Hold 10+ years
GUNUNG (7676) - Gunung Capital Berhad: Just 3 Simple Reasons For You to "Hoot" Gunung
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