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Saturday, November 21, 2015

Gadang Holdings - A New Rising Star

I have been following Gadang since September 2015 & decided to accumulate this stock when the price was moving at the region of RM1.38-RM1.45 in most of the time in October.
The reasons I invested in this company were as follows:
1. Capital City Project (estimated net profit = 220m & company market value = 310m)
2. Outstanding construction order book = 805m (profit margin = 10% & enough to busy next 2 years)
3. Unbilled property sales = 189m @ 31/5/2015 (excluding capital city project)
4. Good history in successfully getting jobs in MRT & from Petronas (most important, delivered with good profits)
5. Prudent & Sound Management (old school business man)
6. Cash in hand (31/5/2015 @ RM232m & increase every year since 2012)
7. Debts to equity = 50.7% (borrowing = 193m)

Subsequently, the Company had accepted the Pengerang Package 2 Project with contract value of RM375M from Petronas on 21 October 2015. This was good suprise & this news had really pushed the price up since then.
Based on my own calculation, my price target for Gadang is RM2.50 (refer to Table 1 below), representing potential upside of 32.8%.
My calculation & assumptions may be wrong & I have to confess that I am not professional analyst, you are freely to disagree my projection.
My presentation here are merely for sharing & reference purposes only.

Table 1: 4 years average & Price Target 
Note: Please refer to Table 5 for how to obtain average 4 years' historical PE ratio.

Table 2: Profit Estimation for FYE 2016 (based on Q1 result)


Table 3: Movement in Construction Order Book
Note:  CFO Ms Kok had announced in 2015 AGM that Construction Division still have a total of up to RM875m orderbooks till-date (19/11/2015). (Please read here for more details: AGM 2015 updates 嘉登控股 股东大会 2015 by Zefftan)
I can't really get the amount as announced in AGM & please help to point out which part I may have gone wrong in the calculation. Thank you in advance.

Table 4: Comparison on Q1 2016 & 2015

Table 5: Financial information based past 4 years' audited accounts
Recommendation:
The above are only figures based on historical & current financial reports, you are welcome to read articles from Icon for better picture of this stocks:

Declaration:
I have interest & own shares in this company.
All the above are merely presented & written for sharing, educational & reference purposes and does not constitute as recommendation to purchase/buy or sell. You should make your investing decision based on your own judgement & at your own risk.
I will not be responsible nor liable for your action.

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