Investing

Do you dare to buy some more Gadang?

As you know I have recommended you to buy Gadang and many of you would have bought it. The chart below shows that it has gone up from Rm 2.10 to close at Rm 3.31 today, an increase of Rm 1.21 or 58% in the last 3 months.

As the price has gone up, your margin limit has also gone up and you have additional buying facility.

Do you still dare to buy some more Gadang?

All the buyers of Gadang would have seen its announcement in Bursa as follows: one share will be split into 2 shares. After the share split, one bonus share will be given to every 4 shares and one free convertible warrant will be awarded to every 4 shares. The EGM to approve this multi proposal is on 3 rd Nov. 2016.

All the buyers would have also seen that Gadang’s earning per share was 40.7 sen for last financial year, ending 31st May 2016.

gadang

In a situation like this, there would be 3 buyers who have bought Gadang at the same time and at the same price and each of them would end up with a different result.

A day trader: The day trader with a chicken heart would have sold when the price went up 20% and now regretting for selling it too earlier.

A normal average investor: The normal average investor would have sold when it went up 50% a few days ago and pleasantly surprised to see that the price continues to go higher. He would say to himself that he would buy back at a cheaper price during price correction. What will he do if the price continues to go much higher? He will not buy back at a higher price than the price he sold.

A Super Investor: The super investor will study the case carefully and he sets a realistic target price after taking into consideration of its 40.7 sen EPS, the bonus shares, bonus warrants and its future profit growth in the construction business. Moreover, Gadang was awarded the contract to develop 24.5 acres of Kwasa Land within 20 years. Although property market is currently not so good, Gadang did not pay for the land. Gadang can wait while the land value appreciates. Can you imagine how much the land appreciates in 10 or 20 years?

I think Gadang will go above Rm 4.00 easily at P/E 10.

Can you find another share selling at P/E 10 with such good profit growth prospect?     

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