@ icon8888, why GOB wants to buy the house ware business? If i remember correctly, James70 was mentioning this fits into their retail strategy at Da Men..but i am not sure how....???

if i may add to Icon8888's comment, post rights issue, GOB is literally debt free. GOB can literally finance the entire Bandar Cassia's project with its operating cash flow. This is because the cost per square feet of land at Batu Kawan is at about RM5/- (and fully paid for) and a 22 x 70 square foot house is selling at RM450K (minimum price). Do the maths. Batu Kawan project will generate the free cash flow for GOB to fund its future expansion of their landbank. The excess cash will have to go somewhere. Furthermore, I don't think GOB will indulge in distributing much dividend to their shareholders (if we analyse past dividend trend for both GOB and Malton).

@ johnny cash; what is the time frame medium term?

@ James70, i believe the low cost component in Batu Kawan that you are referring to belongs to the "abandon" housing projects left over by Equine Capital (under Patrick Lim).

In the future, GOB also needs to commence building its obligatory LMCs (Low Medium Cost). In the scaled down model in GOB's Batu Kawan sales gallery, these are the flats and apartments. Construction has not commence for this portion. I don't think there are any landed terrace houses for the LMCs - which should be good because revenue yield per square feet will be higher this way.

yeah man...racing towards RM1.11 ...hahaha - need to feed him with Tongkat Ali...

@ icon8888, really respect you bro.

@ icon8888, i agree with you that GOB's expected future earnings are quite easy to predict.

For the Batu Kawan project ALONE (without factoring DaMen), the most prudent EPS figure is RM0.52 post rights issue.

If compute based on 300 acres (instead of 50 acres) of land at Batu Kawan 13068000 square feet

Assuming if the land is utilised to build houses only.
Each house = 30 x 100 feet
3000 square feet

Number of houses build: 4356 units

We assume they build 4000 houses

Each house priced at RM400,000 (cheaper than the project new launch price at RM450K).
$1,600,000,000 GDV

Assuming a 15% net profit margin - highly unlikely due to very cheap land cost (at RM5 per square feet)and zero gearing post rights issue $240,000,000 (net profit)

Number of shares post rights issue;
(228Mx2) 456,000,000

Earnings per share from Batu Kawan Bandar Cassia.
$0.52

This is really a damn good counter to hold for the long term. I predict "long" as in until all the commercial developments have been sold out. The GOB salesman told me the commercial developments are the LAST to be build.

@ icon8888, wanna ask you...is it too naive to say - the best time to average down is during rights issue?

I would like to continue buying into GOB now (@ RM0.96) but i have no more funds. Cannot afford to sell Malton as Malton is down too. My only hope is that Malton will rise when GOB rights issue occur in Q4'14.

My plan is to fully subscribe to all the rights issue...and go out on the open market to buy other people's OR (rights to subscribe to the rights)? Do you think this is a wise move?

Of course, i will hold on to all the GOBs - definitely going to ride out this storm.

@ icon8888, no...not at all. I am not the least blaming you at all. The decision whether to buy or NOT to buy (or sell or NOT to sell) lies solely with the reader. I don't think you owe anyone a responsibility. The gains (or losses) is mine and me alone to bear.

sorry - newbie here...what is the meaning of the usual "T+4 Syndicate Way"??

@ optimusx8888, you are right...sigh - pity me...i also feel bad....unlike others who chase the stock (at RM1.20), i wait for it to come down to RM1.10...mana tahu? it came down crashing all the way to RM0.98....

@ Icon8888 ;
The other day when i was at Batu Kawan GOB sales office, the salesman told me they are about to launch Callisia Phase 2 with starting price of RM450K to RM750K (higher than the sales price for previous projects at RM350K) sometime towards the middle of this year.

Previous projects were almost fully sold out. So, the increase in sales price for the new project coupled with almost a full take up rate of previous phases indicate good public reception for their houses at Batu Kawan.

@ hooi, wow...you are really aggressive on Malton...any reason why?

mmm...that is my concern...given that all of Malton's projects are in hot location - what is our exposure during budget announcement? like BLR rise? increase in RPGT? or worst still, a recession?

Even MahSing has changed its focus to build more of middle class housing.

I suspect all the middle class housing is "outsourced" to its sister, GOB whilst Malton focus on premium development?

Hi Icon8888,
Thank you for your explanation.

Can we say that investors who do not subscribe to this rights issue will only lose out?

This is because say, if the investor bought on Friday (25th Apr'14) at RM1.11,but then, he did not subscribe to the rights issue at all. Hence,
the EX price after rights issue drops to RM0.81 ((RM1.11+RM0.50)/2). He lose out RM0.30 for not subscribing to the rights issue.

Is it correct? Thanks for your patience.

ok - just a silly question...
The announcement states that the rights will be at RM0.50.
The closing price as of Friday 25th Apr'14 is RM1.11.
Hence, assuming if the EX date is on Monday 28th Apr, the new share price will be RM0.81 ((RM1.11+RM0.50)/2).

Hence, the rights issue will reduce the price of the shares (from RM1.11 to RM0.81).

From an investor's point of view, buying the shares on Friday 25th Apr'14 at RM1.11 is a guaranteed way of losing money?

@ icon8888,
Hi Bro. Just have a few questions. Thanks for your patience.

(1): Please confirm whether the rights issue is at RM0.50? Like is it really firmed up at RM0.50 and will not be changed?
(2): When is the rights issue going to take place? I believe a while back, you mentioned that it will take place at Q4'14 (Oct'14 to Dec'14). Try to locate that posting but cannot find it. Sorry about this.

If possible, please help to explain the whole process for rights issue again.

From memory - it runs something like this:
- GOB needs to pare down their par value from RM1.00 to RM0.50 because Company Law prohibits issuing rights when share price is trading below par value.
- Need Bursa approval. Approval obtained during Q2'14 (Apr'14).
- then, need to wait for something...

Thanks for your patience.
27/04/2014 15:11

@ Optimus7;
If I may add; the demise of Patrick Badawi/Lim in Penang is closely related to his ambitious project;
Penang Global City Center (PGCC). His plan is to build mega commercial / residential projects in a pristine land in Penang Island. Penang Global City was not well received by Penangites. Penang Island is already so bloody small and having a mega project like PGCC is simply not sustainable. This maybe one of the reasons why BN lost Penang. The rest is history.

However, the same cannot be said of Bandar Cassia. People’s sentiment towards Bandar Cassia has been quite positive.

So, you can see that in the former, Penangites objected towards Penang Global City whilst in the latter, Penangites favor Bandar Cassia. This information may help to reduce our risk when holding GOB.

@ Optimus7;
This is just my humble 2 cents opinion from an ordinary working class Penangite (with no special connection whatsoever).

One thing for sure, Penang state government is committed to develop Bandar Cassia. The land in Penang Island is limited thus forcing the price of land in Penang Island to spiral upwards. This coupled with the expected growth in population will push people to stay at the mainland.

The list of developments slated for Bandar Cassia consisted of:
IKEA (Ivory JV with Ikano), KDU University College (Paramount), University of Hull, Theme park, tendering for golf course soon, and importantly, it is flanked by industrial parks and very near to Penang Second Bridge.

Importantly, Penang state government does NOT want to see Bandar Cassia to fail. In terms of politics, there is bound to be symbiosis between the state government and property developers. The state government wants to show there is substantial development in Penang (i.e.; they are better administrator compared to BN) and they want to profit from increased volume of property transactions whilst the developers wants to make a profit. Hence, we can conclude that either side won’t like it if one is to screw up.

With this logic, hopefully, nothing bad will happen during our tenure when holding these shares for Malton and GOB.

@ Icon8888,
Actually, I hail from the Island. Congratulations to you for discovering GOB and entering sometime in Mar’14 when the price is trading at about RM0.70. Even a born and breed Penangite like myself is oblivious to this opportunity.

Planning to visit Bandar Cassia this weekend to get a feel on how big this project is going to be. May snap a few pictures and share with everyone here. When we talk about GOB, we cannot exclude her “sibling” Malton.

It does NOT appear to be a coincidence that Malton’s 300 acres of land is situated right besides GOB’s 350 acres. It seems invisible forces unknown to us mere mortals are at work. My only worry for Malton is that the land does not belong to her but rather a joint venture with Batu Kawan Development S/B (a subsidiary of GOB). If Datuk Desmond Lim is really behind GOB, then there is no fear that this JV will fall out. Hopefully, someone can comment this.

My best bet is that GOB will provide the population boom that Malton needs to sustain her commercial development. Given what I have experienced at Tambun Indah and the magnitude of Bandar Cassia, I am planning to load on GOB at RM1.10 this coming Monday. Have been sitting on the sidelines waiting for the price to drop. Hopefully, with the upcoming rights issue, this will reduce my average cost for GOB. This is the price to pay for being a latecomer.

@ Icon8888,
There is one thing you should mention in your article. I believe the market segment that GOB is targeting at Bandar Cassia is the middle class income group. Why is this important? Coming from TI (Tambun Indah), i can say their flagship project - the Pearl City - is targeted to fill this void which is the lack of affordable quality housing for the middle class group.

Right now, at Penang Island, RM550K is considered affordable for a 1000 square feet condominium. Given this price tag, alot of middle class Penangites from the island moved to the mainland to purchase landed properties. During an economic recession, there is still a strong demand for good quality properties from this middle class group. This group of buyers will still contribute to the company's bottom line during the recession.

As a Penangite myself, i can say this - there is a serious lack of supply for good quality and affordable housing in Penang~!

That is the reason why i am interested in GOB - solely for the 350 acres of land they have at Bandar Cassia.

@ Icon8888, you can try to buy Malton? In my humble opinion, IF one has GOB, then he should have Malton too.

@ oneteamwalk...knn is a foul word...decent educated people will not use it

planning to buy the shares and subscribe to the rights issue to reduce the entry cost.

Yes. Definitely, will buy GOB. Now, just waiting sellers to sell at RM1.10. Most do not want to budge.

damn... so many people wanna buy at RM1.08 - but no body wanna sell

@ Icon8888, got some questions to ask you...hopefully, you can help.

by the way, this is totally a beginner's question - what is the meaning of 2 for 2 rights issue? If i have 20K of GOB shares, do it mean i will be entitled to 20K rights issue? also, what is the impact of par value reduction on the price of the share? Why companies do it?

Sorry to ask so many questions.. just wanna know more.

What are the chances of a further consolidation tomorrow? Like whether the price will drop to below RM1.10? Looking to enter between RM1.05 to RM1.10...

Also, i notice that during the morning session - the price seems to be trading rather lowly but in the afternoon session, the price seems to be trading rather on the high side. Why is that so?

HI guys...just wanna ask - what are the chances of a further consolidation tomorrow? Like whether the price will drop to below RM1.10? Looking to enter between RM1.05 to RM1.10...

Also, i notice that during the morning session - the price seems to be trading rather lowly but in the afternoon session, the price seems to be trading rather on the high side. Why is that so?

Gosh - seems like everybody is washing their hands clean now...board out at RM2.00. Convert to Malton and GOB.

@ Icon8888, Honest to God, i really appreciate your advice. Thank you so much.

Actually, i plan to dispose all of Tambun Indah tomorrow and then finance the GOB purchase. It is pointless trying to wait for TI to go up any higher. Rather, the funds are better utilised to finance GOB (touted as the next Tambun INdah) which has a higher potential for capital appreciation compared to TI. After this, my portfolio will only be Malton and GOB.

What do you think?

By the way, i really like your article - GOB part 6. The way you put it is so sexy -
"The Bandar Cassia group (Malton & GOB) will be the blue eye boys of Seberang Prai Selatan. They are simply the best of the best."

Hi guys...
Wanna ask:
Do you guys know when will GOB award the rights issue + free warrants?
Also, at which point will they award those rights issue + free warrants? Like for shareholders registered as of what date?

@ Icon8888,
Wanna ask:
Do you know when will GOB award the rights issue + free warrants?
Also, at which point will they award those rights issue + free warrants? Like for shareholders registered as of what date?

sorry - what is the meaning of overbought?

aahhh...
patience is a virtue
good things come to those who wait at the sidelines...
continue to wait longer

hopefully, this counter will drop to below RM1.10. Then, can move in to accumulate.

Me too... i appreciate the sharing by Icon8888. Please keep it going...

@ icon8888,
need your advice about portfolio balancing. Currently, i have 2 counters under my belt - Tambun Indah (TI) and Malton. Been waiting patiently on the sidelines to load on GOB.

About TI - its current market price is RM2.04 (today's close). If its fair value (as touted by RHB Research) is RM2.20, there is a potential profit of RM0.16. This is the opportunity cost for selling TI.

I am thinking of selling off TI and waiting to load GOB when the price of GOB drops to below RM1.10. If GOB has risen way above my budgeted entry price of RM1.10, then, maybe i will just recoup the profit from Malton.

All i wanted is to have additional bullets when GOB drops to below RM1.10. For me, i think market sentiment for GOB is hyped up and the price may drop in the future.

Do you think this is a wise choice?

Hi Icon8888, Your article (GOB Part 6 Best of the Best) really makes alot of sense. Cross check against TheEdge report on 21st Apr'14 and the facts tie out. Thanks for the good work.

@ icon8888, just asking, when is the rights issue ? what are the chances that price may scale back after the rights issue?

maybe it will go down further as contra players need to close their position.

yes......minum milo - anda jadi sihat dan kuat....then, it gives late comers like me a chance to accumulate

@ dalpinia...hopefully, you are right.

mmm... this GOB is a different beast compared to Tambun INdah. I remember TI share price does not appreciate so much...it happens in stages...but maybe because TI's volume is not that much to begin with.

@ james70, thanks. I think i have made an ass out of myself. The information is available online:

http://announcements.bursamalaysia.com/EDMS/edmswebh.nsf/all/F00018BD8C06EA6448257AA4005D6CB8/$File/Malton.Ann%20on%20JDA%20with%20BKDSB%20.pdf

http://blog.intproperties.com/1113/the-development-of-batu-kawan-and-its-land-price-trends/

Thanks for your patience.

ok - i see.....then, Batu Kawan Development S/B is actually wholly owned by PDC (Penang Development Corporation)? in other words, it is under Penang state government? am i right?

@ Icon8888, if it is not too much of a hassle, please include Malton in your write up. Thanks a million.

@ James70, just wanna confirm with you, The Edge (21st Apr'14) mentions that the JV was entered between Malton and Batu Kawan Development (a company of PDC). But The Edge (21st Apr'14) does not mention anything about Malton and Abad Naluri for the JV. Just wondering ..whether the party to the JV is Batu Kawan Development or Abad Naluri?

@ Icon8888, if it is not too much of a hassle, please include Malton in your write up too...

hopefully, GOB price will drop - then, can start to accumulate

the only drawback about the land at Bandar Cassia is leasehold land. I think buyers will prefer freehold versus leasehold.