Investing

Gadang’s development of Kwasa land

My purpose of writing this article is to share with you my knowledge of share investment especially in view of Gadang’s multi announcements including its latest announcement of receiving the letter of award from Kwasa Land Sdn Bhd.

On 6th Sept Gadang announced the following:

  1. PROPOSED SHARE SPLIT of one share into 2 shares ;
  2. (II) PROPOSED BONUS ISSUE OF SHARES; one bonus share for every 4 shares after the split.
  3. (III) PROPOSED BONUS ISSUE OF WARRANTS; one convertible warrant for every 4 shares after the split.

On 23rd Sept 2016

Letter of Award from Kwasa Land Sdn Bhd.

Gadang Holdings Berhad (“Gadang” or “Company”) is pleased to announce that it had accepted a Letter of Award from Kwasa Land Sdn Bhd (“Kwasa Land”) as its development partner to develop the proposed residential development identified as R3-1 of “Kwasa Damansara Township” District of Petaling Selangor Darul Ehsan.

The award is subject to a definitive agreement to be entered into between Gadang and Kwasa Land.

A further announcement on the details of the award shall be released by the Company upon signing of the definitive agreement.

Kwasa Damansara, a future township located on the area of a former rubber estate in the Malaysian state of Selangor that is in the process of being developed. The development is expected to take place over 20 years from 2015 and is part of the Greater Kuala Lumpur Strategic Development Project under the 10th Malaysia Plan announced in 2010.[1] 

The project is located on the 2330-acre (939-hectare) site formerly occupied by Rubber Research Institute Malaysia (RRIM) in Sungai Buloh.[1] In 2010, prime minister Najib Razak announced that the land was being earmarked for development.[2] In 2012, the Employees Provident Fund (EPF) subsidiary Kwasa Land Sdn Bhd purchased the land for RM2.8 billion and was tasked as the master developer for the proposed township.

As I said before, there are already an oversupply of houses and condominiums in every town and city in Malaysia and I advised people not to buy shares of property companies. Moreover, you must know that the current good profit announcements were from previous sales concluded long ago. But the future sales will definitely be less.

After having said that, I would fail in my duty if I did not point out to you that this case is completely different.

Gadang’s total number of issued shares is only 216 million and its market capitalization is only about 600 million. Which bank has so much money to lend Rm 2.8 billion to Gadang to buy up the Kwasa Land which is the choicest piece of property around Kuala Lumpur.

Gadang does not need to borrow Rm 2.8 billion to buy the land. The joint venture is like Gadang is using a silk string to tie up a fat cow which will produce milk continuously over the next 20 years. If there is no market for houses and condominiums, Gadang will not build while the land continues to appreciate in value.

I am aware that there will be a few sceptics who would say that I have already promoted Gadang a few times before when its price was much cheaper and why I am encouraging people to buy Gadang again at higher prices; so that I can unload some more of my large share holdings! This seems logical. If I do not take the opportunity to sell, I would have to buy at higher prices. Am I so stupid?

I am doing this like I am teaching you how to fish instead of just giving you fish.

I have no such intention of taking advantage of you. I am nearly 84 years old and all my knowledge and experience will die with me if I did not share with people who are interested. Of course, my favorite critic, Ah_boon will sell Gadang as soon as he reads this article.

I am obliged to tell you that I have a lot of Gadang shares and if you buy or sell Gadang shares, you are doing it at your own risk.

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