Golden Pharos Berhad (GPharos - 5649) is primarily involved in harvesting. saw milling, klin drying of timber as well as glass manufacturing. The company had recently announced on a joint venture agreement between it's wholly owned subsidiary Permint Plywood Sdn Bhd and Cymao Plywood Sdn Bhd.
The joint venture will see Gpharos restarting it's plywood manufacturing operation that had been ceased previously during 2005. The joint venture will allow Gpharos to once again emerge as a plywood manufacturer, joining the ranks of Mieco and Evergreen that had been seeing massive demand from exporting to overseas.
Evergreen had see capital appreciation of 500% from a lowly RM 0.50 to a peak of RM 2.50 in a period of 1 year.
Mieco is also great with approximate 325% in capital appreciation from a price of RM 0.40 to a peak of RM 1.30 within a period of 1 year.
Both Evergreen and Mieco had been enjoying the bullish demand as well as better forex gain due to a continuous weaker MYR against the USD.
How would the JV works?
According to the joint venture agreement, the newly incorporated JV company will see 60% ownership from Permint Plywood Sdn Bhd, with balance 40% by Cymao Plywood Sdn Bhd.
The JV will bring value to Gpharos by:
- Recognizing a income from disposal of depreciated asset to the JV company.
- Consistent buyer for log harvesting from JV company.
- Rental income from JV company on the usage of the land, building and other infrastructure.
Fundamental Outlook
The latest quarterly had saw Gpharos capturing higher revenue, which is mostly contributed from it's timber harvesting, saw milling and klin drying.
While it is too fast to annualized the next 3 quarters with the same EPS that will see a 8 cents EPS for 4 quarters, the demand in timber, especially raw log is reflected by established player in the market such as FLBHD, WTK and Taann.
Focus Lumber Berhad
Ta Ann Holdings Berhad
WTK Holdings Berhad
Technical Outlook
The current technical outlook for Gpharos is very interesting, as it had been resting on the former resistant line at the range of RM 0.49 to RM 0.50. Currently, the resistant line had become a base support line for Gpharos. With the growing volume in sight, Gpharos could be trending higher along with the latest corporate development that will favor a better financial for Gpharos in the coming days
On a short term outlook, Gpharos will be looking to challenge previous resistance at RM 0.63.
Cheers and have a nice day
Regards,
Bone
GPHAROS (5649) - GPharos - Plying Upwards
http://bonescythe.blogspot.my/2016/01/gpharos-plying-upwards.html
GPHAROS, GPHAROS (5649), 5649, EN5649, KLSE:GPHAROS, Investing, Bonescythe Stock Watch,
