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Monday, September 8, 2014

GUOCO under institutional investors radar screen !!!

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Technical Analysis
IN Big Picture GUOCO land is under institutional investors radar screen and I am not caught in surprise this stock been purchased by them ... I am look at the macro level the wave  starts with the Cycle wave degree followed by the primary and Intermediate wave degree... it very important to look at the overall big trend for the stock before I am committed to zoom down further in.
Pls look at the chart below,  the small chart is the major trend for GUOCO, basically it indicate this stock have many wave degree pointing to north. I zoom in to the recent uptrend which is Dec'2013 till today, basically you can see it is an extension 3/C.

This pattern has been define as a trend pattern in which wave 3 is extended, it is the most probable trend pattern to occur, very often the wave 1 length is equal to wave 4 in time and prices.
Current status:
Most probable wave 4 is ended at the fibo 23.8%, base on my observation wave 4 is ending in between Fibo 23.8 to 38.2%, if wave 4 is ended at 23.8%,  we should see a fast acceleration to go north soon.

Let zoom it down to H1 chart, the downtrend channel line been broken and now the prices is sit above the line, the short term downtrend been invalidate, sideways or wave 5 uptrend is should under developing now. 


Fundamental Analysis from Kenanga.

War chest of landbanks. 
The group has a remaining total landbank of c.9,300 ac, of which 51% is in Sepang, 41% in Jasin, Melaka, 6% in Rawang and balance are niche parcels, which are mostly located in prime areas in Klang Valley (e.g. KLCC, Gombak, Sg Buloh, etc). This under researched group’s landbank size is not too far behind UEMS of c.12,000 ac and more than IJMLAND’s c.6,000 ac while its landbanks are mostly located in Klang Valley. We think that Guocoland’s current market cap of RM1.2b is unjustified when compared to IJMLAND’s RM5.2b and UEMS’s RM9.4b. Notably, the bulk of its landbank was acquired in the 1990s and early 2000, which would imply low land cost. Recently, the group also increased its stake in one of their JCE which owns 3,869 ac of landbank in Jasin, Melaka (refer overleaf).

3-year pipeline GDV of RM2.5b,
 which was recently highlighted in The Edge, comprising: (i) landed residential project at Emerald @ Rawang project, (ii) township development at Pantai Sepang Putra @ Sepang, (iii) high-end landed residential at Alam Damai @ Cheras, (iv) 28 factory units at PJ City Commercial Hub, and (v) portions of Damansara City. Positively, it appears that a substantial amount of projects are geared towards landed residentials or industrials, which should fare well in terms of sales.

Damansara City (GDV: RM2.5b) will benefit from upcoming MRT station.
The project is located next to Pusat Damansara and directly fronts the upcoming MRT station. The group is in the midst of selling its DC Residency. We also do not discount Guocoland selling its completed offices via en bloc sales or securing JV investors. Note that the group also has a 21.7% stake in Tower REIT that invests in offices, and is the manager of the REIT; this could be an avenue for asset realization as well. (Refer overleaf).

Under heat from UMA query. Last week, Bursa issued a UMA query. Guocoland’s share price had shot up 50% within a 5-day trading period with heavy daily trading volumes. The company has reverted to Bursa stating they are unaware of any reasons for such strong price performance. Based on our analysis of previous the stock movements which have experienced UMA this year, we gather that from the date of UMA, the quantum of correction is between 11% to 18% and the correction period will last 16 – 50 days before bottoming out.

Projecting FY14E and FY15E core profits of RM49.3m (+43% YoY) and RM65.6m (+33% YoY). 9M14 core earnings grew by 47% YoY to RM40.9m driven mainly by margin expansions from its property divisions. Our FY14 estimates are based on annualized 9M14 figures. FY15 should be driven by stronger property sales of RM640m from PJ City, DC Residency, Emerald and its Sepang project (refer overleaf).

An under-researched counter. The stock has a very volatile 3-year historical PER range of 11x-138x (average: 30x) while its PBV range is 0.7x-1.3x (average: 0.9x). We believe there is a mismatch in terms of the company’s asset value and their speed of RNAV realization. However, in view of better earnings prospects via unlocking of landbanks in the near future, we expect its PERs to narrow the gap with its peers.

An RNAV play. Primarily, our RNAV is driven by revaluation on its landbank, investment property and inventory value to market prices. Only DC’s project is valued based on DCF of its future profits. Thus, our valuations are conservative as we are opting for land-driven RNAVs rather than assuming full development value of each landbanks. We derive an RNAV of RM5.89 and assume a steep 50% discount (higher than our average discount applied on developers of 31%) to derive a TP of RM2.95. We recommend that investors buy on weakness as we strongly believe that Guocoland is severely undervalued. Trading BUY.
Source: Kenanga

http://klse.i3investor.com/blogs/kenangaresearch/57218.jsp
http://klse.i3investor.com/servlets/staticfile/244437.jsp

My trading partner research:
 GuocoLand (Malaysia) Bhd has an established presence of over 50 years in property development, management and investment in Malaysia. The company is also part of the Singapore-based GuocoLand Ltd. The multi-award winning GuocoLand is a leading regional property plater with established operations in China, Malaysia, Singapore and Vietnam.

GuocoLand Malaysia's property project include the Emerald master planned township in Rawang and prime residential and commercial developments in Klang valley. These include Commerce One, PJ City Corporate Hub and the soon to be launched Damansara City.

GuocoLand Malaysia is also active in property investment via Tower Real Estate Investment Trust (Tower REIT) and has in its portfolio high quality and yield-accretive office buildings (Menara HLA, Menara ING and HP Towers) in KL. It also owns Thistle Johor Bahru and Thistle Port Dickson Resort.

GuocoLand vision is to create a prominent and sustainable property group in Malaysia. Guocoland's landbank totals 10,000 acres comprising 5,000 in Sepang, 4,000 in Jasin, Melaka and pockets of land in the Klang Valley.

The RM2.5 billion GDV Damansara City is scheduled to be fully completed by mid-2016, ahead of the mass rapid transit (MRT) Sungai Buloh-Semantan line which is set to be operational before the end of 2016. This flagship development at Damansara City, is being sold at RM1,600 per square foot and comprises 370 units of one to four bedrooms contemporary design homes as well a penthouse.

All the current GuocoLand's developments which encompasses a shopping mall, will provide a substantial recurring income base for the company.

 GUOCO 5 Years Revenue & Profit Trend
Recent company activities:
Massive hiring to cope recent development projects
High profit but flat dividend paid over the years, what's next?

Rumors:

Guocoland's landbank are all undervalue.

My trading plan as below
Buy at 1.82
1st TP : 2,00
2nd TP :2:20
Med Term : 2.80
Long Tern : 4.20

Stop Loss : 2 candle close below 1:75 early 
Stop Loss : 2 candle close Below 1:35 late

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Stock analysis and comments presented on klseelwavetrading.blogspot.com are solely for education purpose only. They do not represent the opinions of klseelwavetrading.blogspot.com on whether to buy, sell or hold shares of a particular stock.
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