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Tuesday, September 2, 2014

GOB ... Undervalued, Link To Desmond Lim & Ta Kin Yan

It was reported to have ties with Tan Sri Desmond Lim and Tan Sri Ta Kin Yan.



The firm will develop 106 acres in Batu Kawan, Penang in the immediate term with an estimated GDV of rm662 million. In addition, a joint venture with Lembaga Getah Malaysia in Ampang, KL with a GDV of rm1.2 billion will also kick off in 2015.



In Batu Kawan, GOB started with a total of about 460 acres. One hundred acres were developed with the units fully sold while the balance 365 acres have a total expected GDV of about rm1.7 billion.



For the next phase of 106 acres the firm is targeting to obtain approval from the Penang authorities by end of 2014 so that it can launch the units in 2015. Increasing activities in the Batu Kawan project, where GOB had acquired the land long ago at low prices.



Current (Aug 2014) market value for land parcels in Batu Kawan has reached rm45 to rm55 psf. That makes GOB’s land in Penang worth some rm700 million at least. That is 80% higher than the firm’s market cap of rm234 million and net debt of rm155 million put together, indicating that the stock is undervalued.



GOB is an attractive alternative Penang mainland play and encouraging take up rate in Batu Kawan will spur the re rating of the stock.



Apart from Batu Kawan, in the Klang Valley, GOB has a total available land bank of 98 acres with a potential estimated GDV of rm2.93 billion. This includes 66 acres in Taman Equine in Seri Kembangan worth about rm1.52 billion in GDV, six acres in Jalan Ampang via the joint development agreement with LGM worth about rm1.2 billion and the 26 acres of land in Sungai Long (to be developed in 2015) that GOB purchased earlier from Malton that has an estimated GDV of rm200 million.



The JV with LGM is significant as it will be GOB’s first project in the city centre. These project contribution will be reflected in its financial year ending March 31 2016.



GOB has two projects planned for launch by end 2014 worth rm401 million.



To beef up its coffers, GOB has proposed the rights issue exercise which will raise rm113.7 million in fresh proceeds. Half of the proceeds of rm58.7 million will be used to repay GOB’s borrowings and bring down its gearing to about 0.4 times.



Othman Mohammed, an executive director is the largest shareholder with indirect holdings of 12.05% as at June 30 25014. Meanwhile the top 50 shareholders comprising individuals and fund houses hold about 42% of GOB.



It is also worth noting that GOB has ventured into the consumer retail and F&B to diversify its revenue stream by acquiring a 65% stake in PNT for rm50 million.



In the next three years from Aug 2014, property will still be its major focus contributing 70% to its revenue. But it is projecting retail and F&B to contribute up to 30% then.

 

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