For Information Only: Director Low Hock Keong's timing appears good (vs MD Sam). He sold 1.25m @ 63 sen (Jan 16) and sold 2.0m @ 89 sen (Jan 18) and about 220k @ 64 sen (16 Aug 18).

EPF owns about 45.1m Gadang shares prior GE14 , and after 100 days, now it has about 46.5m despite selling about 4.6million shares.

On 8 May 2018, a day prior to GE14, Ekovest is closed at 80 sen. Post GE, it dropped to as low as 50 sen and closed at 55 sen due to weak sentiment because of concern of PH manifesto on toll. Today is only 74.5 sen. Upside should be good as fundamentally Eko is not effected on the toll roads.

@dompeilee, thanks for the heads up.

Prior to GE14, the price hover around RM5.60. The price has been compressed to RM3.60 post GE 14, having taking into account the negative sentiment on toll abolishment. Taking into account dividend of 25 sen each year, it should be valued approximately RM5.30 for the next 12 months. It is unlikely the new government will 'abolish' this toll.

OCK cash flow appears ok, based on yearly operating cash flow (RM120m and growing) + net receivables less payables (RM180m). Total operating cf + net receivables + cash = RM400m.

And short term borrowings is about RM280m (of which about RM100m is revolving credit + BA, can be replenished). Interest is about RM20m.

Cash flow is not a major issue, as its operating cash flow is growing in double digits.

How come no one celebrates when the warrant was up from 20sen to 30sen in a week? So, its a matter of perspective.

@warchest, thanks for the insights. Perhaps you can elaborate. The 1Q18, shows that the net interest expense is about RM4.7m, and EBITDA is about RM20-22m, it looks ok to me, unless I missed out something. (of course, I think they need to pay the principal as well, but the EBITDA is set to grow from RM100m to RM140m in next one or two years). Do share your view.

@VFTRADER, Tq
Looks like they are gearing up in Vietnam for expansion.

@Zai Zai, Tq.
OCK Group was chosen to be ISOC’s technical partner (not sure it will share the capex).

Consensus analysts FYE18,19,20 = 97,110,119, To focus on FYE19 + 20 and beyond. More importantly sentiment for this sector overall improve.

@klse, PBT is up, but the margin is down. Previous FYE has high VOs. Share price will be positive when sentiment is good (disregard figures).

Adjusted core recurring net profit (exclude one off expenses) is about RM110m vs RM100m. More importantly, the construction orderbook is 4.0x revenue. Property segment will continue to do well from share of GDV of Capital City, and new launches going forward. More importantly, it can continue to sustain double digit growth from RM110m for next two (2) FYs.

Let's see how the market react for next couple of weeks.

China Tower IPO next few weeks (use as reference, cannot be compared as restructuring done by China Tower is unique as shown by VFTRADER "very creative" article). Hopefully bring some positive awareness to local and foreign institution investors in Malaysia. Also good for edotco. With 5G on the way, potential is great.

If I am a big towerco player (like edotco), I will pay a premium and takeover the entire group, since OCK towerco in Myanmar and Vietnam is growing steadily with very healthy tenancy ratio. Analyst may catergorise them into telecommunication sector, which is facing the headwind recently (OCK's telco services only comprise about 30% of the entire valuation).

On contrary, the towerco business (valued around 70% of the SOTP), is doing quite well, and the profit growth is "incremental", as a result of increases in number of towers AND increases of tenancy ratio. Hopefully, the next 2-3 quarters, the earnings improvements is substantial enough to attract "foreign" and "local" institutional investors. Until the figures comes in, it may be difficult for retail investors to understand this towerco business model, as non was listed in Malaysia.

(Of course, many are disappointed as the price have not reflect the forthcoming growth).

One of the few stocks that selling below Net Current Assets of RM800m plus and with earning growth of double digit. Script is ready, waiting for action.

Myanmar & Vietnam TowerCo (forms about 70% of UOB Valuation of about RM1.0b)

Continue to ride the growing telecommunication wave in Myanmar. OCK has completed and hand over 830 sites (as of 25 th of May) of which 754 sites were delivered to Telenor Myanmar and 76 sites to Mytel. While Telenor Myanmar sites deployment appears to be slow (with 166 sites yet to be delivered), OCK has secured and delivered more co- location sites (335 vs. 83 sites in 4Q17) during the quarter. The tenancy ratio for the current 830 sites (including the co-locations) stands at 1.4x vs. 1.29x (with 713 sites) in the preceding quarter. Noteworthy, the group has achieved a milestone in leasing its telecom towers to all four major mobile operators in Myanmar (i.e. MPT, Telenor, Ooredoo and Mytel).

SEATH updates. The group’s Vietnam operation, meanwhile, have a tenancy ratio of 1.29x (with 2,732 tenants under its tower count of 2,118) currently, following the recent acquisition of 118 towers for c.USD1.5m. We understand that the group is having discussion with several towercos to acquire another 700 tower assets, with funding coming from internally generated fund.

I heard coming quarter is good (i.e. FYE18 is better than FYE17). However, how the price reaction is anyone's guess. Positive sentiment in construction sector helps. It depends how market react, last 3 FYEs average is RM85m, next 3 FYEs average estimates is RM120-130m (with existing projects).

@EST85 I was merely refer to Q4 and expected better results than last financial year 5-10%. Recent days volume appears better than previously (a positive sign). Gadang is the one of many stocks that its fundamental runs faster than the share price for a year plus. All it needs is "a play" and the "script" is ready. When will it happen, is half a billion dollar question.

Announcement soon on 26 July 2018.

"Pan Borneo Highway contracts to be honoured" (The Edge Weekly). There may be delays and hopefully Gadang's tender will be successful.

https://www.thestar.com.my/business/business-news/2018/07/17/turnaround-seen-in-construction-stocks-says-uob-kay-hian-research/

UOB KayHian - Turnaround seen in construction stocks

Gearing is not high if compare with similar sector. On contrary, earning will improve as tenancy ratio improve and more towers deliver.

The last time I asked them to look at their crystal ball, they said "under maintenance". They have to refer to CLSA Feng Shui chart. Look, not many avoided this rout (esp small and mid cap), not even those who runs billions of dollars. I have since not use crystal balls, octopus, parrots or bomoh, or even Feng Shui (I was told one former PM used it prior to his arrest).

I know, everyone wants to know when will be the "trigger point", "catalysts", "turnaround point". You imagine TF has said no analysts can understand his "Digital Transformation" or his "Amazon on Air". For me, give sufficient time, it suppose to reflect the intrinsic value, if it did not happen, it tough LUCK. You just do what is within your "capability" to come to a decision of low downside risk and high upside gain.

@FM = fund manager, their medium term is 1-2 years. Sometime we use ST, MT and LT too loosely, everyone has their own definition. A month can be LT for a trader. For me LT is 3-5 years in Bursa environment, MT 2-3 years, ST 0-1 year. (For analyst, they always estimate their TP based on 1 year forward.) The FM TP is RM1.70 based on SOP method (FYI).

My FM said it (Facts) has orderbook of 4.8x (revenue cover), strategic landbank along KL River City (GDV RM7.8b), and EkoCheras Mall (86% tenancy secured based on 650,000sf net lettable area + Duke 1&2 +3 (worth about RM2.4b). Downside risk is low and potential upside is high. Suggested for medium term.

1. EcoWorld Malaysia owns 27% of EcoWorld International.
2. When will properties gain traction depends on PH and BNM policies.
3. Until PH settle down, the direction of many sectors is still unclear.
4. Only consumer stocks are in favour at the moment.
5. Foreign funds trend is still unsettle.

Insider purchase 9.2 million shares @ average of 62 sen (0.4%) (Negligible) started in the month of June 2018.

@CFTrader
Note : Cash stood on 54M , LT borrowing at 177.85M , ST Borrowing at 283M , With interest payment of nearing 20m per annum (effective rate is 4.28%)...

+ Trade and other receivables RM300m - Trade and other payables RM110m = net trade receivables RM190m (It looks better after taking into account the net trade receivables - work/service done, waiting to be collected.

- the larger profit expected by analysts in FYE16, but will only happen in FYE18 (better than expected tenancy ratio). It's like a machine not use up to optimum capacity until 2 years later. So, contribution from towerco will grow exponentially from FYE18.

DY about 6% for 4 days.

For beginners (i.e. 2-3 years participating in Bursa), the best starter is to follow The Edge Weekly portfolio selection, Mr Tong. From there, you can do the secondary research, and filter his portfolio, if necessary.

The Company is hopeful it will be able to maintain or do better next year and to achieve this, it will have to execute its on-going construction projects on a fast track basis. (extracted from AGM minutes dated 8 Nov 2017)...... Likely to be plus minus 5% of FYE2017. Anything PAT increase above 10%, it will be a positive surprise to analysts.

Analysts have high expectation in 2016 on towerco project in Myanmar (to build 920). Due to some changes of focus by the telco, the numbers of tower built was slower than analysts initially expected. Despite the delay, lately, OCK reported about 830 towers built with 1.4x tenancy ratio, which is equivalent to about 1,200 towers in 1Q18. Earnings from towerco growth will accelerate from now.

1) Value of Duke 1 and 2 exceed today's market cap RM1.4b by RM0.4b.
2) Construction order (despite uncertainty) likely to last 3 years

@ez6699 pls use analysts figures. the figures I took is from AGM and some from analyst based on what I can remember(without verifying). The growth in tower is approx. 20%.

Insider purchase (MD) since 2018 (mother and warrants) is about RM8m.

Insider purchase (MD) since April 17 to 5 June 18 is about RM11 million. (For info only).

https://www.edgeprop.my/content/1031063/ekovest-samling-jv-bags-rm21-bil-pan-borneo-highway-job

Ekovest portion is 30%.

TA's analyst (most conservative among others) expects its earnings to be flat from FYE18-20, approximately RM100m (based on existing awarded projects and some landed properties projects to be launched). At today's price 71 sen, market cap of RM470m, PE is about 4.7x, is undemanding. At the moment, market sentiment for construction and property is very weak. Many counters tend to "overshoot on the downside", disregard whether the "actual" impact (good and bad stocks are rerated together disregard their strength).

@VFTRADER, you should replace k with m. The figures should be in million. At the moment, sentiment rule.

Last 3 years average profit after tax for Gadang is about RM85m, and next 3 years average estimated profit is about RM130m, not sure this is deemed as good growth.

During the last AGM's presentation, management mentioned they will launch (FYE19) Semenyih, Melawati and Kwasa Land, all are mainly landed residential properties with a GDV of about RM1.5b.

Perhaps, that is the reason Insider (MD) keeps on accumulating. [sentiment is weak for both construction and property at the moment]

@VGTRADER, it is even more interesting information in page 155, Note 35, of the latest Annual Report 2017.

Insider (MD) continue to accumulate, positive news.

Was informed Semenyih, Melawati and Kwasa Land (JV) GDV of RM1.5b will mainly be landed residential properties, where demand is good. Not forgetting construction order book of RM1.6b that can last 3-4 years.

It's positive news when insider (sam) bought about 16,000,000 warrants from open market and become the largest warrant holder.despite paying a premium of at least 14%. Lookout for the EBITDA growth.

PEG should be consider before making PE evaluation. As long as the G can catch up with the PE, its fine. (Of course, not all the stocks can do it all the time).

CAGR 18% (2016-2020) PE 45x, Even at today's price of RM5.60 or market cap of RM18.5b, it looks like the price is running faster than the fundamental. Average next 3 years profit is only RM511m p.a., giving it a PE of 36x. (Bursa also has quite a number of stocks running ahead of their fundamentals, including Nestle).

Mr MD also qualified, The Board expects the "current year performance" to be weaker. MD's know by 31 May 2018 (FYE), about 39 days away, its FYE18 results is weaker than FYE17. So, the question is, did he buy on the pretext of this 39 days, or on a longer horizon? But I think more importantly, what is your independent opinion - and also- independent ACTION.

"The Board expects the current year performance to be weaker due to the sluggish market condition of the property sector. The construction division’s ability to contain the higher operating cost is critical
to its overall profitability for the existing technically more complex infrastructure projects."

Hmmm.... ...and the MD buy more shares when performance to be "weaker".......

Wow, PE of 48x, must be growing at least 40% for next 2-3 years. Impressive PE. (Last 10 years CAGR is only 16%). Must have doubled its capacity or other good reasons.

@okdoke, I did not go into that detail (although is good practice). I just take last 5 years average (from annual report) of ROE, it is about 14.5%p.a.. (Last 3 years average ROE is about 16.6%p.a.). Past few months, nobody will talk much about fundamental, as our share market is sentiment or momentum oriented (more of a short term volatility).

The perpetrator(s) always has a wider interpretation of what is right and what is wrong. After all, truths can be perceptions at times. Twisting of words to "win" an argument is one sign of "the end justify the mean". Is half truth the real truth?