Background
Gromutual Bhd (GMUTUAL, 9962) was incorporated on 14 August 2003 as a private limited company under the Companies Act, 1965.The Company was converted into a public limited company on 13 January 2004 and has assumed its current name since has completed the Restructuring Scheme which involved taking over the listing status of Medas Corporation Berhad, a company listed on the Second Board of the Bursa Malaysia Securities Berhad.
The Company is principally involved in investment holdings and provision of management services to the subsidiary companies. The principal activities of the subsidiary companies are general and property construction, provision of project management services, letting of apartments and shop offices and investment holdings.
GMUTUAL has track records of over 30 years experience in property development. The company has curved out a niche in residential, commercial and industrial development. GMUTUAL gained good reputation of being trustworthy developer for timely delivery of qualities properties. The company has grown steadily over the years and has undertaken the property development in Melaka and Johor states. The development products range from landed residential, commercial building and industrial parks. Development of service apartments are in the pipeline.
Besides focusing on property development, GMUTUAL has broaden its income based by investing in the properties that provide steady stream of recurring rental income. The investment portfolio includes student’s apartments catering for students from nearby universities, namely Multimedia Media University "MMU" and Universiti Teknikal Malaysia Melaka ("UTeM") and industrial building for manufacturers.
GMUTUAL reported sales of RM133.46 million (US$41.55 million) for the year ending December of 2013. This represents an increase of 28.1% versus 2012, when the company's sales were RM104.15 million. This was the third consecutive year of growth at GMUTUAL. Sales of Property Development saw an increase of 31.2% in 2013, from RM95.05 million to RM124.68 million.
GMUTUAL is targeting to launch projects with RM700 million in gross development value (GDV) over the next few years. To date, it has undertaken property developments in Melaka and Johor with a GDV of RM800 million. Its project named Austin 18 in Iskandar Malaysia achieved 50% take-up rate. The project comprises 319 units of Versatile Business Suites within the mature enclave of Mount Austin in Johor Bahru and is targeting commencement of building works in June 2014. GMUTUAL is optimistic that the fresh and modern concept, as well as its affordability, will continue to attract buyers.
GMUTUAL remained in strong financial standing, with total borrowings at RM50.4 million in end-FY2013, while cash and bank balances increased to RM38.9 million from RM14.0 million in end-FY2012. Consequently, net gearing improved to 0.04 time, as compared to 0.14 time previously.
GMUTUAL recorded Profit Before Tax was more than RM15 million for the past 5 years. The PBT is increasing over the past 5 years.
2009 – RM15,414,173
2010 – RM15,278,995
2011 – RM27,347,531
2012 – RM29,588,901
2013 – RM36,034,145
Shareholder’s fund of GMUTUAL increased steadily over the past 5 years. Shareholder’s fund rose 8.0% to RM286.6 million as at FYE 2013 versus RM265.4 million in the previous year end.
2009 – RM221,975,391
2010 – RM230,657,241
2011 – RM248,774,670
2012 – RM265,408,902
2013 – RM286,597,676
GMUTUAL paid dividend of RM0.015 (FYE 2012) and RM0.02 (FYE 2013). This has translated into dividend yield of 4.2%.
GMUTUAL’s share price is trading at discount of 37% based on NTA of RM0.76 in FYE 2013.
GMUTUAL has several properties that last valuation was conducted for past 5 - 10 years. The properties should worth more than 50% if re-valued. Here are some undervalue properties.
Location |
Land Tenure |
Land Area |
Date of valuation |
Amount (RM) |
Plentong, Johor Bahru |
Freehold |
14.49 acres |
30-9-2003 |
14,507,477 |
Kluang, Johor |
Freehold |
79,843 sq m |
30-9-2003 |
9,340,270 |
Alor Gajah, Melaka |
Leasehold, expiring in 2082 |
41.031 sq m |
30-4-2006 |
3,665,570 |
Sungai Udang, Melaka |
Freehold |
11.03 hectares |
26-3-2008 |
4,124,359 |
Sungai Udang, Melaka |
Freehold |
6.96 sq m |
26-3-2008 |
1,499,402 |
Total Value |
|
|
|
33,137,078 |
Those properties will worth extra RM16.5 million if re-valued at 50% appreciation of price. This will increase GMUTUAL’s NTA to RM0.80.
Price of GMUTUAL still trading at same level since beginning of 2014 (closed at RM0.485 on 2/1/2014) while properties index already up from 1293 points to 1492 points (up by 15.39%).
GMUTUAL is trading at PER of 6.79X while Property sector is trading at average PER of 10.68. Below is the comparison of PER between GMUTUAL and other small cap property companies.
|
GMUTUAL |
EUPE |
MULPHAL |
PRDUREN |
PASDEC |
Share Price (RM) |
0.485 |
0.96 |
0.475 |
0.77 |
0.81 |
Market Capital (Million) |
178 |
122 |
109 |
104 |
166 |
Earning Per Shares (RM) |
0.0714 |
0.101 |
0.0373 |
0.0501 |
0.0592 |
PER |
6.79X |
9.50X |
12.73X |
15.37X |
13.68X |
Average PER of small cap property companies is 12.82X. GMUTUAL is expected to be traded in PER of 12X in long term.
Target Price
Short term Target : RM0.615 (based on PER of 8.61X)
Medium Term Target : RM0.76 (based on Property Sector PER of 10.68X)
Long Term Target : RM0.915 (based on small cap property companies PER of 12.82X)
http://www.mywarrenbuffett.blogspot.com/
Chart | Stock Name | Last | Change | Volume |
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Created by msiawarrenbuffett | Aug 27, 2014
Created by msiawarrenbuffett | Aug 18, 2014
Created by msiawarrenbuffett | Aug 14, 2014
Bonescythe, yr new blog ah? Looks alike with your existing one...at first I also thought of buying Gmutual after reading this. However, after suspecting this could be Bones's new blog in a different name then decided not to enter...too risky after seeing Bones' play....
2014-08-13 11:11
I think you should include further analysis such as ROAE, ROA, profit margins, FCF, owner's earnings, future prospects, market outlook, competitors etc. It will further showcase a company's strength, or reveal some weaknesses in it.
2014-08-13 22:04
Now that you bring this up, I will definitely put it in my list of stocks to be analyzed.
2014-08-13 22:06
FCF al little bit weak mainly property development thru pinjaman., 2013 really good results, on eps., nnwc leaps tengkuk Sahaja, excess cash cukup cukup Makan.....
2014-08-13 22:09
yup, dun believe everything you read here without thorough digesting different sources to cross check. there must be ulterior motives behind everything a stock is "promoted" for certain groups' personal gain. trade with care! have a great day ahead!
2014-08-14 08:55
after some evaluation, some articles are best treated as "SELL" call, regardless how the spinners disguise themselves behind the blogs.
2014-08-14 15:19
As I recall, Bones always tend to make risky 'BUY' calls based on his own technical analysis. His is short term. If you are looking for mid-term or long term investment, I suggest you follow fundamental analysis instead.
2014-08-15 07:40
its not really risky call, it is pure goreng and scamming uninformed people
2014-08-15 13:27
true, most of the time when bones articles are up on a specific counter, you can see a significant buying volume immediately the next trading day (this shows that his blog has a lot followers I guess) but the rally wont sustain much. after few days the trend will go back downwards. thats why I said is more like a SELL call. probably he himself or some big players have accumulated enough and decided to "publicize" that counter for retail buyers to come in whereby they happily take profit in volume. just my 2 cents.
2014-08-15 16:12
cytew
Undervalued by assets or business growth ?
2014-08-13 10:48