Posted by Jaack1 > 2014-06-07 17:27 | Report Abuse

07 June 2014

Dear Mr Gan,

Thank you for sharing on Golden Pharos as well as your past quality postings.

Log output for 2013Q1 was 13,674 htp, Revenue/Losses was RM19.320/0.379 Million.

Log output for 2104Q1 was 11,830 htp (1,844 htp less that the same period of 2013)
Yet, the Revenue/Profit rocketed to RM46.340/RM19.96M

I cannot figure out how this is possible.

Tks/Rgds
Jaack

Posted by Hot.T > 2014-06-07 20:32 | Report Abuse

Read the 2013Q4 n 2014Q1 report...elaboration is in them. But analyze GPharos in a wholesome manner in terms of biz strategy, future direction, current strategic s/holders etc etc.

Posted by 1million > 2014-06-07 20:41 | Report Abuse

Gpharos still undervalue.

Posted by 500plus > 2014-06-07 21:07 | Report Abuse

I am pretty uncertain about the numbers posted by the company man. At Jtiasa, the cost to sales of their timber business is about 80%. Using the first quarter results, Gpharos has a cost to sales ratio of 40%. How is that possible when Jtiasa has a bigger economy of scale. To me, this is one speculative counter where fundamentals may not matter. But anyhow, thanks for the insightful posting. I am avoiding this counter but I wish I am wrong on Gpharos though.

Posted by sunztzhe > 2014-06-07 22:14 | Report Abuse

Thanks for sharing Ben Gan.
There is still some doubts over the sustainability of GP improving fundamentals at this juncture but with the latest Q1 2014 quarterly results and the Annual Report 2013 on FSC certification to fall back on , improving timber demand and the future expectation and likelihood of dryer weather ahead(which supports timber harvesting) , the Rewards of Investment at this material time will be higher than the risk of investment.

It looks like GP is on the cusp of a price uptrend.

Posted by Ben Gan > 2014-06-08 08:29 | Report Abuse

Jaack1, I share your thought. I think there was a change in the top management. That probably did the trick.

Posted by wt222 > 2014-06-08 08:36 | Report Abuse

A change in the top management can improve the net margin by so much????

Posted by wt222 > 2014-06-08 08:37 | Report Abuse

More magical than David copperfield-....

Posted by Ben Gan > 2014-06-08 08:40 | Report Abuse

500plus, I agree the numbers are suspicious. I wish to highlight that JTiasa is a much bigger company. As at 31.03.14, its number of shares issued was 973.718 ml and Treasury shares was 13.679 ml. At GP, the number of issued shares was only 134.546 ml. Moreover, JTiasa had interest bearing loans and borrowings of RM845.885 ml., whereas PG had borrowings of only RM1.070 ml.

Posted by wt222 > 2014-06-08 08:45 | Report Abuse

Price already increased from 0.30 to 0.795 after posting the q1 result...is q1 an one off case or can we see the same in q2?how do they derived such a wonderful high net profit margin in q1??

Posted by Ben Gan > 2014-06-08 08:48 | Report Abuse

sunztzhe, Sustainability of earnings is also my main concern at GP. But I am prepared to give it the benefit of doubt. I am long on the stock; I intend to buy more, depending on how the stock moves. In the stock market, one should go after strength, not weakness.

Posted by sunztzhe > 2014-06-08 08:58 | Report Abuse

Ben Gan, Concur with your investment decision. Based on the latest Q1 2014 results, I have taken a position during recent price weakness . Further position sizing will be dependent on the forthcoming Q2 report.

Posted by Hot.T > 2014-06-08 09:47 | Report Abuse

Guys..i suggest u go thru and do a comparison on 2013Q4 and 2014Q1. Are the numbers suspicious? NO....its all in the 2 reports if you've read it thoroughly. Would the earnings be sustainable? NOT in 2014Q2 bcoz new venture need time, money, mobilization, closure before you can realized your income. Earnings may dip (lower than 2014Q1 but higher than 2013Q4) in Q2 (and perhaps Q3) unless they have an agreement for the supply of the extracted logs at lower cost to the sawmill. Eventually earnings would pick up once contribution from new biz is captured. The spike in earnings n profit for 2014Q1 was due to the 1-off extraction fee of +27 mil GP received to extract balak from 2k out of 2.5k hecters of concession area granted to them for the new biz. FYI..the Q1 results got nothing to do with financial ratios or efficiency ratios in comparison to other timber cos.

Posted by wt222 > 2014-06-08 09:57 | Report Abuse

Hot T.thanks for your comment. Could you kindly elaborate more on their new biz?

Posted by Ben Gan > 2014-06-08 10:00 | Report Abuse

Hot.T, thanks for your comment.

Posted by Ben Gan > 2014-06-08 10:04 | Report Abuse

The result for 2Q14 matters much. For those who wish to play safe, they should wait. For me it is: Nothing ventured, nothing gained.

Posted by wt222 > 2014-06-08 10:05 | Report Abuse

Refer to Note 19 Events After The Reporting Period in their Q4 2013 result. The excellent Q1 2014 result is an one case and shall not repeat in coming quarters.

Posted by sunztzhe > 2014-06-08 10:19 | Report Abuse

Refer to note 19 in page 78 of AR 2013. The Group has unutilized tax losses of RM RM 177 million available to offset against future taxable profits and this is positive for future cashflow

Posted by wt222 > 2014-06-08 10:20 | Report Abuse

This can be useful only when they can make profit consistently and improve their cash flow further....

Posted by wt222 > 2014-06-08 10:21 | Report Abuse

Can they?

Posted by Hot.T > 2014-06-08 13:13 | Report Abuse

Hi ALL..agreed with Ben Gan..i topped up more @ .735/.74 on Friday.
ermmm..sunztzhe..the concession area is abt 2,500 hectares of which +27 mil was for 2,000 hectares...at least there's another 500 hectares of proceed to be realized.
The balak clearing is essential for the future new biz ie iron ore mining which i hope can be sustainable and increase the revenue and earnings contribution to the Co whilst its BAU biz remains status quo.

Posted by newbird33 > 2014-06-08 13:16 | Report Abuse

Agreed. The parent got a piece of land want to do mining, so asked GP to chop down everything on it. Once finished, GP will be like what it used to be.

Posted by Hot.T > 2014-06-08 13:16 | Report Abuse

wt222...its ok bro. we just need to further analyze the layers to the financials and join the dots and timeline.

Posted by sklyte > 2014-06-08 13:24 | Report Abuse

Just found out, GPHAROS's profit is one off, the logging activities has nothing to do with their normal business, it is part of the special logging they have for the mines they had from their owners! I advise don't chase, next quarter might return to red

in fact, last q end of 2013, if you check financial results, already mentioned about this special 27million profit will be booked next quarter which is Q1 2014, yet no one want to buy at that time? I already sold mine, please analyse carefully guys

Posted by Fat Cat Tim Buddy > 2014-06-08 13:26 | Report Abuse

many ppls going holland big time liao..

Posted by sklyte > 2014-06-08 13:26 | Report Abuse

sunztzhe, the way you analyse is pretty dead wrong, they have been harvesting their own hectares to barely breakeven their operation so they noneed to pay dividend to shareholders! just expense out to their cronies every month! this company used to be RM10, it shows poor quality of corporate governance! anyway I thought they gonna turnover, after analysed it , better not go

Posted by sunztzhe > 2014-06-08 13:46 | Report Abuse

Hot. T, Thanks for the clarification as a gross miscalculation had been made and it had been taken off.

wt222, Appreciate your timely and incisive feedback! wow it hurts!!!

sklyte, Thanks and your point is noted.

Posted by Hot.T > 2014-06-08 14:22 | Report Abuse

It's ok...nobody's perfect....cash is king..info is priceless..hv a good weekend all and berhati hati di Jln Bursa!! :)

Posted by Hot.T > 2014-06-08 14:25 | Report Abuse

Sklyte..hope GP's mining biz would help push them in d black on top of their normal biz.

Posted by sunztzhe > 2014-06-08 14:36 | Report Abuse

Hot.T,
i3 is a great place for learning cum check and balance or rather baptism of fire and angst!! Have a good weekend too.

Posted by Hot.T > 2014-06-08 16:03 | Report Abuse

Alwayz a pleasure..cheers!

Posted by Ben Gan > 2014-06-08 16:19 | Report Abuse

Hope what is appended below is useful:
Operating revenue
The segment's operating revenue increased by 222% to RM38.84 million in the current quarter as compared to RM12.05 million reported in the previous year's corresponding quarter. The increase in revenue was contributed by the logs sales proceeds amounting to RM27.29 million from the concession of the Group's timber management subsidiary, Kumpulan Pengurusan Kayu-Kayan Trengganu Sdn. Bhd. ("KPKKT") during the current quarter under review. The six (6) compartments in the concession were part of a land area in KPKKT's concession that was awarded to the Group's shareholder, Lembaga Tabung Amanah Warisan Negeri Terengganu ("LTAWNT") by the Terengganu State Land Office for mining purposes. In return, KPKKT was given the right to extract and sell the logs therein.

Posted by Ben Gan > 2014-06-08 16:26 | Report Abuse

The above filings with Bursa did not say for how long the 6 compartments in the concession will last. Hence, we can only guess. Please note that GP is not going into mining. The mining rights are given to LTAWNT that is a shareholder of GP.

Posted by Ben Gan > 2014-06-08 16:29 | Report Abuse

Please note that KPKKT is a wholly-owned subsidiary of GP.

Posted by Ben Gan > 2014-06-08 16:33 | Report Abuse

Do check well before deciding what decision to take as a wrong understanding could cause you to lose a lot of money.

Posted by sunztzhe > 2014-06-08 16:46 | Report Abuse

Ben Gan,
GP subsidiaries had obtained Forest Stewardship Council ("FSC") endorsed certification on 21 April 2008 by Scientific Certification Systems ("SCS") for 108,900 hectares and another subsidiary had obtained FSC endorsed certification for its 20,243 hectares Cherul Forest Concession on 10 December 2012 that was certified by SCS Global Services.

Total forest hectares under its management = 108,900 + 20,243 = 129,143 hectares

Could you or any one here put a market value on $$$$$$$$$ per hectare basis?

Posted by wt222 > 2014-06-08 16:51 | Report Abuse

You two a bang adik ah......still back to square one despite so many discussion earlier today.....

Posted by wt222 > 2014-06-08 16:53 | Report Abuse

Sunztzhe,u deleted yr earlier ridiculous analysis and come back now with the similar story....why????

Posted by sunztzhe > 2014-06-08 17:03 | Report Abuse

wt222,
As you are a very accomplished and experienced investor in investment valuation, please advise how would you value 129,143 hectares of timber concessions on RM per hectare basis?

Posted by wt222 > 2014-06-08 17:05 | Report Abuse

They have been in this biz all these while....not the first day in this biz..seems been struggling for years.....so what makes you to have high expectation on their future outlook?

Posted by wt222 > 2014-06-08 17:07 | Report Abuse

The q1 result is one off case,period.biz back to usual,unless u see something special...

Posted by wt222 > 2014-06-08 17:08 | Report Abuse

I m just an ordinary investor....but I talk abt sense n logic....

Posted by wt222 > 2014-06-08 17:14 | Report Abuse

I didn't say price will drop for sure since there is a technical break out....this stock has been moving below rm0.50 for the past few years.....tightly held by the big boys---mayb they have some interesting game plans ahead----just that it seems to be speculative.....as little change in its fundamental at the moment.....who knows....

Posted by sunztzhe > 2014-06-08 17:18 | Report Abuse

wt222,
The basis of high or very low expectation of any stock in BURSA including GP is dependent on a host of factors including one's personal experience with the stock as well. Did you have any past negative experience with GP? I don't.

However as an investor I am keen to learn from you or any one here who is willing to share his/her knowledge in estimating a valuation of timber concessions on RM per hectare basis. What is the methodology that one goes about in determining an estimated value of 129,143 hectares of Timber concessions?

Posted by Hot.T > 2014-06-08 17:22 | Report Abuse

....please dont restrict the info gathered only from the annual reports. lots can be obtained from other sources...it would also help if u do have some insider info...right?
Cheers..Roger & Out.

Posted by wt222 > 2014-06-08 17:23 | Report Abuse

They have been in this biz for the past many years may....net profit seems to be so so..I don't know why..--what makes you to think that their future outlook will be changed??any expert in timber to provide their comment?they owned the concessions but not the land..-isnt it?

Posted by wt222 > 2014-06-08 17:25 | Report Abuse

What will the estimated profit from their timber concessions?they don't own the land....

Posted by wt222 > 2014-06-08 17:28 | Report Abuse

In fact I made some this round....no negative feelings-...just try to make things cleared before my next step on this counter....

Posted by JYap > 2014-06-08 17:33 | Report Abuse

Q4 2013 as written

19. Events after the reporting period.

Subsequent to the period end, the Group's timber management subsidiary, Kumpulan Pengurusan Kayu-Kayan Trengganu Sdn. Bhd. ("KPKKT") opened a tender to extract logs from six (6) compartments covering 2076 hectares in it concession area. The successful applicants that have been selected on 28 January 2014 had paid 30% tender deposit of RM8.19 million out of total logs sale proceeds of RM27.29 million. The balance has to be paid within 30days of the issuance of the approval letter.

All payment should be received in 2014Q1??? Consider One off??? Be careful anyway, cheers.

Posted by sunztzhe > 2014-06-08 18:02 | Report Abuse

wt222,
GP is committed to sustainable forest management on 129,143 hectares of forest under its management under selective cutting approach whilst maintaining continuous forest cover and species diversity.

The valuation per hectare will most likely be based on the Net Profit per hectare. Based on recent Q1 results, GP made a net Profit of 19.96 million per 2000 hectares of timber concessions.

Assuming no change to status quo on company business operations the potential net profit for the entire concession = 129,143 hectares X 19.96 million/2000 hectares= RM 1,288 million.

Market Capitalization for GP based on last Friday's closing price = RM 107 million

Does this infer that GP Market cap for forest concession of 129,143 hectares could potentially be valued at RM 1,288 million or 12X 0.795= RM 9.54 per share??

If you do not concur with this estimate of value, please do advise and share with fellow i3 members on a more realistic approach to value 129,143 hectares of GP timber concessions.

Does anyone in this thread has the experience or network of friends who can assist in estimating a value for the 129,143 hectares of forest concessions?