Posted by talkonly > 2014-04-29 21:45 | Report Abuse

Pity already ignored. You say?

Posted by JokersJones > 2014-04-29 21:46 | Report Abuse

Ya lor he doesn't dare to come out anymore

Posted by talkonly > 2014-04-29 21:47 |

Post removed.Why?

Posted by JokersJones > 2014-04-29 21:48 | Report Abuse

Zzzzzzz me too...nice

Posted by talkonly > 2014-04-29 21:49 |

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Posted by talkonly > 2014-04-29 21:49 | Report Abuse

Anything else?

Posted by screw_jokerjones > 2014-04-29 21:52 |

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Posted by talkonly > 2014-04-29 21:52 |

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Posted by screw_jokerjones > 2014-04-29 21:53 |

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Posted by talkonly > 2014-04-29 21:53 |

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Posted by talkonly > 2014-04-29 21:55 |

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Posted by Jumbo3 > 2014-04-29 21:57 | Report Abuse

Oh Jumbo. !!

Posted by Jumbo3 > 2014-04-29 21:58 | Report Abuse

Jumbo see a few fools talking here......and fools supporting Icon. So is Icon a .....? jumbo stomp stomp

Posted by talkonly > 2014-04-29 21:58 |

Post removed.Why?

Posted by Jumbo3 > 2014-04-29 21:59 | Report Abuse

Jumbo even odds against bully........jumbo stomp icon and his little frogs

Posted by Jumbo3 > 2014-04-29 22:00 | Report Abuse

Jumbo think name fit him well......

Posted by Jumbo3 > 2014-04-29 22:01 | Report Abuse

Jumbo rub a dub dub on Icon face......feel it??

Posted by Jumbo3 > 2014-04-29 22:02 | Report Abuse

Jumbo see Icon not man enough to admit ....jumbo rub bum bum again on Icon face.....hope he wake up

Posted by Rambotan > 2014-04-29 22:10 |

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Posted by Rambotan > 2014-04-29 22:14 |

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Posted by talkonly > 2014-04-29 22:19 |

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Posted by Rambotan > 2014-04-29 22:20 |

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Posted by Alphabeta > 2014-04-30 11:49 | Report Abuse

It was a commendable effort from Icon8888 to come up with a detail analysis of GOB business potential and financial impact.

I would like to answer Icon question on why "No analyst has ever suggested that GOB will have the potential to report such windfall gain in the immediate future?"

The answer to that question lied in the way Property Developers recognizing revenue and profit in their book.

The revenue & profit is recognized over the development period (usually over a number of years from construction till hand-over of units). It is not recognizing 100% on completion date.

The stage of completion is based on the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs. The percentage of completion is applicable on the sold units only.

Majority of the profit from office and service apartments could have been recognized in the past two years prior to completion in the year 2015.

Posted by Alphabeta > 2014-04-30 11:58 | Report Abuse

Based on the segment report in FY 2013, the gross profit margin shown in the Property development segment was 22.2% (RM59.3mil/RM 266.8mil) and 11.2% in FY 2012 (RM 31.2mil/RM 278.7mil). These gross profit margin does not match the 42.5% (RM 212.5mil/RM 500mil)computed.

Posted by Alphabeta > 2014-04-30 12:20 | Report Abuse

Even if you checked the 3Q (31/12/13) result for FYE 03/14. the gross margin for property development is only 15.5% (RM 38.0 mil/RM 245.7 mil.

If the estimated development costs is over-provided and the final total development costs are lowered, then the gross margin could be better. Since the stage of completion is at an advance stage, unless there were contractual issues. The impact will not be much.

Posted by Icon8888 > 2014-04-30 12:51 | Report Abuse

Alphabeta, when come to investing, I always caution myself to be open minded and don't be defensive when other disagree with you. I would like to thank you for your input in the first place.

However, referring to your comment "Majority of the profit from office and service apartments could have been recognized in the past two years prior to completion in the year 2015.", I don't think that is the case, due to following reasons :

(a) GOB reported RM19 mil net profit in the 9 months ended 31December 2013.
For the twelve months ended 31 March 2013, they reported RM30 mil net profit.
Add together, the aggregate profit over past two years are RM49 mil. I don't think all this profit came from Damen service apartment and office. GOB has many other projects contributing to net profit over past two years.

(b) I have personally visited Damen construction site. The entire structure is still flat (in the shape of a shopping mall), the office cum service apartments are just beginning to rise from the flat structure. No matter how you look at it, it doesn't seem to be reflecting construction progress that can lead to substantial billing

Feel free to disagree if you have other valid points.

Thank you

Posted by frog > 2014-04-30 12:54 | Report Abuse

I disagree to agree so I disagree.

Posted by james70 > 2014-04-30 12:56 | Report Abuse

The foundation and substructure works on DaMen was only recently completed(end 2013). According to the contractor Domain Resources, DaMen will only complete by Q3 2015. The total cost of this contract is RM297m. As discussed with Icon earlier, it is unlikely that GOB will book such a high profit at one go. As they progress the construction, they will be paid and book that as a profit. As of today, they have completed 3-4 storeys of the building. I think we can look forward to increased revenue and profit in the coming quarters.

Posted by Icon8888 > 2014-04-30 13:07 | Report Abuse

Wow James you always surprise me with your grasp of details. It gives me comfort co investing with you in a stock : )

I remember you ask me last week whether I think it is possible to complete service apartments cum office in 2015. I check with my contractor friend. He told me nowadays construction can be executed very fast (one floor every few weeks). Construction speed is a function of payment. If the principal has abundant financial resources, the contractor can move very fast.

Posted by Icon8888 > 2014-04-30 13:12 | Report Abuse

James the 297 mil you mentioned refers to construction cost for service apartments / office only or for entire Project ? (Including the mall) ?

Posted by james70 > 2014-04-30 13:17 | Report Abuse

Likewise Icon. Investing is long term. So to know what you are putting your money in is important. I must admit my knowledge has increased a lot after reading your posted articles. Thanks and Cheers!

Posted by james70 > 2014-04-30 13:23 | Report Abuse

RM297m is for the superstructure. RM128m for the foundation and base structure.

Posted by Icon8888 > 2014-04-30 13:31 | Report Abuse

428 million for the entire project vs my original assumption of 300 mil

Will revise the article tonight

Posted by james70 > 2014-04-30 13:39 | Report Abuse

I just came across these numbers from the 2012 and 2013 Malton AR. Profit to be recognized is still not too shabby at RM112.5m. But the interest expense is a lot higher now at RM14.25m vs RM7.7m projected initially.

Posted by Icon8888 > 2014-04-30 13:46 | Report Abuse

Malton AR ?

Posted by james70 > 2014-04-30 13:55 | Report Abuse

Domain Resources, a wholly owned sub of Malton was appointed the contractor for DaMen. Refer to the 2 ARs.

Posted by Alphabeta > 2014-04-30 14:20 | Report Abuse

Construction costs could be in early stage, don't forget the land costs which form a sizeable chunk of the overall development cost (47.8%). The % of completion based on actual dev cost over budgeted dev costs could be much more than the physical construction progress. In accounting treatment, progress billing to customers can fall behind profit recognition.

Based on the FY13 chairman report, the sale take up rate of service apartment already hit 95%. Hence, the revenue and profit recognized in the earlier years depend on the sale take-up rate then.

Posted by Alphabeta > 2014-04-30 14:21 | Report Abuse

There could be interest costs capitalized as development costs.

Posted by Alphabeta > 2014-04-30 14:33 | Report Abuse

If you refer to note 8 of FY 13 annual report, the total interest capitalized to development cost in the year was RM 23.45mil, RM 19.6 mil was imputed on interest free financial liability - landowner’s entitlement.

Posted by Alphabeta > 2014-04-30 14:51 | Report Abuse

GOB construction segment profit contribution in FY13 and FY12 were negatives. Only in the recent Q3 (31/12/13), the segment contributed positively at RM 2.3 mil and this represent a miserable 3.2% profit margin.

Posted by Icon8888 > 2014-04-30 14:54 | Report Abuse

Alphabeta, what is the conclusion ?

Posted by james70 > 2014-04-30 15:09 | Report Abuse

GOB was completing the low cost component of the Batu Kawan projects which could explain the poor or negative margin in 2012.

Posted by kancs3118 > 2014-04-30 15:40 | Report Abuse

@ 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.

Posted by james70 > 2014-04-30 16:06 | Report Abuse

The LMC homes obligation have been fulfilled as I understand having spoken to the sales person when I visited the gallery on 12Apr. Those homes are not the flats and apartments you are referring to.

Posted by Alphabeta > 2014-04-30 16:24 | Report Abuse

At current price, GOB prospective P/E in FY 14 already at 7.11 times compared to last year 3.75 times. With marginal improvement in EPS (14.22 sen per share), P/E multiple revaluation was not due to fundamental.

Fundamental has to catch up to justify the higher P/E. Though price to book is 0.84, there is no dividend payout for the last 2 years.

If you compared this with Hua Yang even though it’s EPS is expected to come down, it is around 28.5 sen per share. At current price (reduce price), its prospective P/E is 6.64 compared to last year 4.95. Its dividend yield is around 7%. Price to book is around 1.38.

You can also check counters like Daiman, Glomac, Crescendo etc with comparable P/E. These counters have good dividend yields.

Unless GOB has exciting development up their sleeve in the next few years that yield better profit margin, any further upside in price will not be justifiable. It needs to have more strategic land bank like those in Batu Kawan that you have mentioned in earlier posting. Its land held for development is just too small to give longer term earning visibility.

Posted by Alphabeta > 2014-04-30 16:26 | Report Abuse

What i meant is longer term earning growth visibility. Let said double the current EPS in the next 5 years.

Posted by Icon8888 > 2014-04-30 16:36 | Report Abuse

Thanks Alphabeta for your view. Huayang is indeed a good company. So are Daiman, Glomac and Crescendo

Posted by james70mother > 2014-04-30 17:06 |

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Posted by james70mother > 2014-04-30 17:07 |

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Posted by james70 > 2014-04-30 17:24 | Report Abuse

you are the owner of your actions rich_trader=OneMillion and ultimately your karma. you'll reap what you sow.