Sold Gamuda-WE

I have sold Gamuda-WE. Obviously it was at a loss as the construction sector has changed fundamentally since the change of government.

Overall, the total portfolio has to be re-visited at not much due to the corona virus as this is an uncontrollable event but because of the change of government - which is a controllable event. Hence, the danger in Malaysia is not an event which is not controllable but the biggest danger in Malaysia is people.

Anyway, Genting and Genting Malaysia (despite whatever it is) now seem interesting as it has dropped because of much fear rather than true fundamentals.

The PLUS asset should remain where it is now

Frankly, with proposals by various parties on the toll assets - where it is reported there are a total 15 highways in proposal and under review. Among them, the Gamuda, IJM and PLUS's highways. Let me put these thoughts from the 3 proposals perspective:

1) proposal by MOF to buy the 4 highways controlled by Gamuda - which we know is the government's money, although Tony Pua's argument is that the government does not need to come out with extras. That's what he said. But he also claimed that Malaysia's debt has exceeded RM1 trillion. Buying the Gamuda's highway will add the debt no doubt, despite it is ring-fenced against the proceeds from the toll collection. The idea is buying over the assets will increase the country's debt no doubt. Additionally at a time where we are promoting privatisation for Malaysia, this act is in the opposite which is nationalisation of assets. This is also against PH's manifesto.

2) proposal by Khazanah - it is reported that Khazanah has submitted a proposal to purchase 15 highways owned by Gamuda, IJM and including the PLUS highway. Among them, the largest in contention is the PLUS asset. As we know, PLUS is already controlled by Khazanah through its 100% unit - UEM. In my opinion, Gamuda and IJM can manage these assets better than Khazanah. Can Khazanah have other ways besides not collecting toll? If yes, I would like to listen. The largest asset among the many is the PLUS asset which is around RM30 billion or more. Can Khazanah afford to reduce the toll collection fee? The other 49% owner of PLUS highway is owned by EPF which is the bulk of Malaysians money anyway - the owner is the one which will use the assets anyway. Why pass to the government. As an EPF contributor, I would prefer this asset. Can EPF find any better alternative after this sale? Also, this exercise seems like a left pocket - right pocket exercise as IJM and Gamuda are largely owned by the Malaysian institutional funds anyway. Why give more fees to the investment bankers and for them to take home more bonuses next year? Isn't that what we do not want? Giving money to the rich again for doing nothing much but shuffling assets.

3) proposal by Maju - Maju is a private party. In the past, its proposal was backed by Evercore - a large Private Equity. Maju as it is, is not very rich. Tun Mahathir's past has shown that he was willing to support entrepreneurs if they are willing. (Think Yahaya Ahmad, and many more) However, tolled highways are not difficult assets to manage, as long as managed well - unlike building a car. Hence, there is a huge probability that foreign PEs will make a killing as Maju itself may not have the capability financially to do this. Why give a large part of EPF's earnings for example to parties like Evercore and several more? They do not bring any additional value to us besides again shuffling papers.

All in all - I feel that it should remain status quo as the assets are owned largely by Malaysian institutions. This is just like what we like to term "Small little problem, but we go and dig (create) for more problems."

The idea to buy Gamuda's related toll highways probably is the most rational (among the rest)

Prime Minister's Department made an announcement where it is in negotiation to buy the concession owned by Gamuda, and this is probably the most rational.

Gamuda as mentioned owns 44% of LITRAK which has LDP and SPRINT under that vehicle, 50% of SMART in partnership with MMC, and 70% KESAS in partnership with Selangor State. These highways pass through the most populated areas of Klang Valley, hence by buying them, it probably sends a message that they are doing something to their promises. It would impact the most number of people although we can say that whatever that is forgone towards development in the rural is provided to the urban. The fact of the matter is that, cost of living is most dearly felt in the urban area than the rural.

Most of Gamuda's related highways except for SMART is highly profitable. Most of those tolled highways additionally are left with short tenure, which makes it more reasonable to buyback. Costs to the government will not be as high. LITRAK's highways will end by 2030 while KESAS should have ended by 2024. I believe SPRINT should have ended by 2034 to 2036.

The most significant piece of the proposal is that the government is exploring to impose "congestion charge" pretty much like Singapore's concept - without the smartness yet, as Singapore's concept is charged based on traffic, where it is proposed for the current charges is charged as congestion charge for 6 hours during the peak hours. Between 11pm to 5am, it is proposed for non toll charges while 30% discount will be given for off-peak times.

This concept is a good idea as it probably disperse traffic more evenly, hence basically asking companies and people to relook at the working time. It is current, as most ideas are towards flexi hour working, which to me brings even more productivity than not. A simple fact that can be argued is that with people spending less time on the road as well as better utilisation of mass transportation services, it by itself already causes better management of facilities and time.

Before this, I have always wanted to suggest towards creation of a "transportation fund" as part of the ways to address the promise towards reducing toll highways. It seems that this one is a way to start. The collection from the full fare in peak hours and further 30% discount is a model that can be worked on. To impose congestion charges even on roads that are non-tolled at the moment will not be a popular idea, but that is one which the government must look at holistically, as in the future our KL city will be almost deadlocked, if we do not look at the revise transportation model. As it is MRT3 is being postponed and the current situation will not allow the government to even consider more tolled roads.

The transportation fund that I have thought of can be used to buy up some of the tolled roads as and when they become available for purchase. The government need not buy them off in one go but it can be done in stages. One of the entity that government could work with is Khazanah and I believe Datuk Shahril the current CEO of Khazanah should be experience enough to look at this.

Why Gamuda rather than PLUS for example?

If one looks at the highways that Gamuda has control of, they probably are less affected by gearing. LITRAK's debt for example is about RM1 billion. And if the government is to take over the concession, they can also take up the debt. The PLUS one is much bigger, which I believe the debt through bonds is still around RM30 billion. Moreover, who is to compensate the EPF's contributors whom have funded the purchase of the concessionaire 8 years ago at RM34 billion enterprise value?

The ones owned by Prolintas under PNB are also more challenging as we know PNB is an investment arm for a large part of the community and they can be sensitive. Many of PNB's highways are also just breaking even. And they are still building 2 new ones - DASH and SUKE - if I am not mistaken.

As above mentioned, LDP and KESAS should be the ones that are more compelling to be purchased back and show that this is the model to go forward towards highway or road charges.

I believe the purchase of the concessions of LITRAK, KESAS, and SMART should be at fair value with some small discounts. A look below shows that the majority of the shareholders for LITRAK for example are owned by funds. I believe except for Gamuda which owns 43.58%, funds own almost 50% of LITRAK.

In buying up assets especially on the part of the government, one should be very careful as it cannot afford to be seen as overpaying while the capital markets be seeing it as non-punishing towards them. A small step that is taken wrong would impact the market as well as the economy on a macro level.

On whether this is value depreciative towards the other highway concessionaires especially like WCE, Ekovest or even Taliworks, I think it should not. To make the transportation fund model (as above) works even better, I suggest for incentives through capital markets such as the ones like Real Estate Trusts (for highways) to be created. From this, renegotiation on toll rates could also be initiated as the companies that are incentivised through various means may even reconsider the pre-negotiated contractual rates. A simple example, the Transport Fund could invest into the listed highways and from there push for "congestion charges" type of model from within. Highways that do that could be incentivised through various means and that could also include maintenance contracts for other non-tolled roads.

In reality, as I see it, after the 9 months in power, the current government is getting a better hold of the situation and understands both segment - people and market economy - much better. As it is, one can see that remarks that are made suddenly has been much reduced. They also do seem to understand that to elevate the current situation, it is not just by giving but in its entirety: the people's cost of living, the business sector, the general economy are intertwined. Even this time around the Gamuda's situation is handled better than the one when part of the package for MRT2 was terminated suddenly.

I am actually seeing more positive signs last few months except for the constant pressure to win by-elections.

Buy Armada, Sell Gamuda

For the last 1-1/2 months, Bumi Armada has been a highly traded stock, which is probably unusual considering that it used to be a Composite stock. On a daily basis, its volume can go as high as 500 million stocks traded, i.e. almost 9% of its 5.871 billion issued shares. This shows that there are a lot of traders and speculators with probably syndicates involve in the stock.

When this happens, usually the fundamentals are out of whack. At the moment, there is a tense situation concerning its short term fundamentals and among the analysts even they could not agree closely on the valuation of the company among themselves. The UOB Kay Hian analyst gave a 10sen valuation for Bumi Armada whereas the CIMB analyst gave a 71 sen valuation for the company.

Basically, for me if the UOB's valuation is correct it basically can almost call for bankruptcy or almost liquidation for the company as one of the major concern for Armada is its short term liquidity.

I had written a piece on the stock, and I have less fear over its short term liquidity. I think it is something that can be addressed, which is why I am more inclined towards the analysis provided by CIMB. Hence, I have made a 25,000 units purchase of Armada for the fund and at the same time Sold Gamuda. If one can remember, when I bought Gamuda few months ago, it was also probably out of whack in terms of its pricing for a very good company. The almost termination (underground portion) of MRT2 for Gamuda caused selldown on the stock. It was lingering at around RM2.30 to RM2.45. Now it has gone up and I am taking profits although I do think it will continue to go up.

At the moment, in my opinion, many of the stocks are attractive hence giving me difficulties to pick stocks. With Bumi Armada, I am taking opportunity of its volatility and selldown which I think is wrongly sold especially when it has become a traders stock.

I think over the long run, it will readjust itself, hence I decide to take a small purchase of the stock.

Why we should look at beyond Price Earnings Ratio

One of the subjective area to look at in evaluating a business or listed company is not its Price Earnings, Price to Net Asset Value but its planning, vision, how it makes use of situation to make itself a leader in the future. Most professional analysts, amateur investors (like me) forget about that.

We more often than not concentrate on concession value, delivery, Price to Net Assets, total book order etc etc. Those are very much Graham and the old Buffett. The new investors including the new Warren Buffett, Softbank, some of the best PEs and VCs in Silicon Valley look way beyond what we see. That is why they were able to figure out Google, Uber, Grab, Facebook, Alibaba and many more.

I have to admit I do not have the capabilities and capacity to be in that realm. I do not have that opportunity as well as my universe of looking at companies does not include the very good startups or visionary companies that remain private.

However, among the local traditional companies, we can possibly decipher which company that look beyond its current as compared to those who do not. There are those we know is is danger of being or already been disrupted. Those are the transportation companies for example, media company such as Media Prima, TheStar for which I am not able to figure out where its future is heading.

The easier intangible investment is one where we see the macro picture - i.e. where disruption of affecting, and then we look at micro level and see at what stage is the position of the company. I will take one example. We know that e-commerce is in the midst of disrupting retailing, we then take several malls and try to figure out its positioning. Will it be disrupted? Is the space they are playing different. One example is IGB REIT. How do we see its future. Company or business like Mid Valley will not be disrupted like a taxi business being disrupted. It may face a slower growth. The much lesser malls may face a harder truth where they may not even survive at all, but perhaps not One Utama, MidValley or KLCC. They will face slowdown but not death in the short term.

Over in this, I would like to highlight 2 traditional companies where if they play it right, they can be part of the disruptor. If they are not, they will also be disrupted.

Airasia

18 years ago, Airasia was a disruptor to the traditional airlines like MAS, SIA. It is so successful, so much so that what we would have thought a business that is hard to survive has in fact caused continuous difficulties to MAS. It is now much bigger than MAS today and I am not able to figure out the survival of MAS beyond the next 3 years - unless there is another round of financial support from Khazanah.

Airasia, however is facing a new challenge. A wave of disruption to disrupt its own business. At the moment, its business model is being copied and airlines that are operating from a bigger airspace may want to eat into its market share. Its vast advantage in costs is also reducing as other airlines are now figuring out how to reduce costs as well.

Hence, it is now facing different challenges as it expands into other countries like India and Japan, 2 countries that are very different when looking at low costs tickets. India already has a very dominant low costs airline which is more competitive than Airasia India - Indigo. It is much larger, probably politically stronger and has more planes and better command of routes. Hence, Airasia in competing has to look at 2nd and 3rd tier cities. Luckily enough, India is such a big country that not one airline can dominate the airspace. It is more like China and US than Malaysia or Thailand.

To compete, I strongly believe that what the management of Airasia led by Tony Fernandes is doing is right. Going digital. By going digital, it is probably going to create that little inch of advantage as it goes regional. When Airasia was at its infant age, it started credit card purchase. That was a small disruption but its other advantages in the digital space was still early. Today, its booking system, checkin and others are ahead of many airlines including SIA - as I tried using Scoot. I happily admit Scoot still lose out to Airasia's booking system despite it not being perfect.

The community today is also more used or susceptible to self booking, payment, checkin etc. That is something which brings advantage to Airasia as it is trying to reduce its manpower per passenger. Airasia's digital strategy is beyond what I can imagine. I believe it is looking how to attract its recurring customer, minimising fuel costs, introducing new routes, new marketing channel, payment system from using its digital initiatives.

Going digital is what Airasia have to continue to invest and its push has to be continually better than others for it to continue to thrive.

Gamuda

Ironically, Gamuda is a company which I now look more in depth after the many situations where its projects was under the threat of being cancelled especially MRT2 underground contract that I now think that it is probably a lot ahead of other construction and developer companies in Malaysia such as IJM and UEM. My previous perception of the company, today I have to eliminate - not because I invested into the company but because now I look at the company more inept. This is because, my investment into Gamuda is still way too small to affect me, personally.

But Gamuda, with its group of management, knowledge depth has to be developed somewhat like Airasia rather than threatened. Most countries that are developed, has strong construction technologies and knowhow. We see that in Korea, Japan, China and previously US. We cannot continually be dependent on foreign technologies when building the country - like what we have done in the past government.

In my reading of several largest construction companies in Malaysia, the other construction companies in Malaysia - like I said even UEM and IJM talks about digital threat and taking advantage of it like how Gamuda sees it. This is unless these other companies do not communicate like how Gamuda does now - but I do not think so.

From here, I strongly believe, because it continuously in the discovery mode - like its investment in tunnelling technology, Industrialised Building System, this mindset is the right mindset for the future of the company. From here, as in any analysis, we should not just look at Gamuda's book order and how many future projects the current government is trying to introduce. We should rather look at how the company get readied itself towards the future.
To understand my writing further, do look at these companies Annual Reports and compare with its industry competitors.

Bought Gamuda and Sold MRCB

I decided to buy Gamuda as I thought that the selling was overdone. I was not around during that time, this trade was made in 8 November 2018.

Generally, I thought that the MRCB announcement of compensated for its highway was already accepted by the investing public. Despite selling, I still think that MRCB is still undervalued but I feel that Gamuda is a better bet in the long run.

I think despite both are not apple to apple, but Gamuda is a better company in terms of capabilities and capacities. Although it has lost several contracts like the MRT3 and HSR due to postponement, Gamuda is still a more solid company in the long run.

Could it be Gamuda is NOT the problem?

When the government announced the termination of MMC-Gamuda being the contractor for the underground portion of the MRT2, it obviously came as a surprise - as it shows that this government can really terminate contracts. As an investor, it does not appear comfortable for me as where and whom do we trust.

When one invests into Gamuda as an example, it is obvious that their contracts in hand (or book order) is one of the largest determinant towards deciding the investment. I am sure, its largest shareholder such as EPF, KWAP does have the similar information as we are - and we hope it is that way.

The new government, when in power promises us one thing. Go by contract and rule of law. We have yet to see that they are not going by the contract as any contract can be terminated and they have not mentioned anything with regards to compensation. Compensation, however does not console the ones whom they feel they may lose their jobs because of this.

We know for sure that it is not the incapability of the JV between MMC-Gamuda in delivering the project but for it is because of the need to reduce costs. However, I am perplexed over why then they do not negotiate until both parties come to an agreement? Usually, that is the spirit as in any negotiation especially towards company which is dependent on government projects, the one holding the trump card is the awarder.

Or could it be Gamuda has been arrogant as they feel that they are the only one who can do the job in Malaysia as it does seem that way. They have mentioned it as well in a 4-pager explanation as announced in Bursa's webpage that in the event it is opened to international companies, there is none others that have the capabilities to bid from within Malaysia - not IJM, WCT, UEM etc. It is because Gamuda and MMC only have the capabilities of such extensive tunnelling work, it seems.

Ironically, the other 50% partner being MMC announced  the below - lacking the detailed explanation, unlike Gamuda.

Gamuda it seems is the only one which is more vocal and concerned; and it also seems that they are the one that is affected more. If one is to ask around, people are more confident of Gamuda's engineering capabilities when comes to this. Rarely, one would mention MMC.

There is obviously more than that, which one could not help to think of. Hence, cronyism came into mind. In my observation, Gamuda does not seem to be the one that seems to be the crony. It seems that the other company - MMC - is more of the concern here.

Why?

If Gamuda is the crony, it would not have been awarded the Penang Transport Masterplan project where it holds a 60% JV stake. That multi billion ringgit project was awarded in 2015 when the current Minister of Finance, Lim Guan Eng was the Chief Minister of Penang. In fact, until the recent change of government, the project faced great difficulties to commence - from getting approval from the federal to getting financing. Now, this announcement of termination came from the MOF although it is mentioned that being the Cabinet's decision.

Najib Razak today, pointed the top 30 shareholders of Gamuda and in the list the largest shareholders are EPF, KWAP, PNB and many other funds that invest into Malaysia. Why not? As in any companies that depend on government contracts, they need to be friendly, but we know that they need to be that. We however do not have complains of their deliveries. In my mind, Gamuda is a quality company, hence the diversified investors. In fact, this is the type of shareholder composition we want among our top listed companies - not the ones which PNB, EPF, Khazanah are the controlling shareholders - where they hold more than 30% to 40%.

MMC - It seems is the other type and Najib may have pointed onto the wrong company. We know who Syed Mokhtar is. Contracts monopolies etc. From Bernas to Pos Malaysia to Proton to port and IPP businesses. He also owns Penang Port and probably caused difficulties to some people from the current government.

Substantial shareholders of MMC Corp

To my concern however is not on Gamuda the stock, but my bigger concern is Gamuda the business and company that it has built itself to be. I have always believe that we need to build our Malaysian companies. Gamuda is one of such. It is capable of delivering what other large companies such as Hyundai, Chinese state companies can deliver - tougher projects - tunnelling. Do it in Malaysia and then overseas - compete there.

I thought the pitch that has always been provided so far is about building our Malaysian capabilities. This is why there is keenness to have our 3rd national car - I thought.

Hence, as a Malaysian, I feel that the government has to revisit the termination. Renegotiate again but try not to give this kind of projects to another Chinese or Japanese company - otherwise we are just another buyer of capabilities. I know they perhaps can be capable or even cheaper but this is not what we have been voting for.

Buying Gamuda-WE and selling Ecoworld and Insas-WB

I have to admit, I trade much lesser than many. Usually, my style is to buy and lay low during bad market times. When it gets hot like what it is right now, I will try to reposition some of my holdings. I can do this because I see stocks as a long term investment and if you read most of articles, these money that I put in is meant to be held long term.

For those that have need for the shorter term, such as children's education needs, medical, house deposits, car deposits, my style of investment is not really ideal. You can however still invest based on the percentage that you are comfortable with.

All these while, if you have looked at my past records, all of those purchases that are made are really fundamental stocks except for a small handful which fundamental have changed. Among those are YFG and Parkson and maybe even AEON.

Over the last 2 days, besides buying Freight Management, I have also done the following:

1. sold all of my Ecoworld at RM1.50.

I thought that since there are potentially other stocks which may be more attractive, I can opt to let go EcoWorld and revisit this stock later. There is no doubt that EcoWorld is still a very attractive stock. It has the best management, which is why I have bought them, and this company will be one of the best property players (if not the best) in the years to come.

In selling, Ecoworld, I have also opt to take the offer for shareholders to take up EcoWorld International which is going for IPO soon. I was offered only 700 units but I did apply for excess and I will report when if I am provided more.

2. sold all of Insas-WB

I think this is because of the premium of about 41 sen and perhaps it is a little too high for my liking. I will still hold Insas.

3. Purchase 3500 of Gamuda-WE

If Insas-WB has a high premium, Gamuda-WE (exercise price-RM4.05) on the other hand, has a 3.21% premium and it has 4 more years (6 March 2021) to expiry. In purchasing Gamuda-WE, I obviously am confident of the parent company. It is trading at RM5.29 now. To be in the money, Gamuda has to move to RM5.44. I am confident of it able to move beyond RM5.50 or more, in the next few years considering the projects that it has gotten. One of the largest, where Gamuda is the project delivery partner - MRT2, has just commenced.

As compared to many of my other holdings, I do not think I will need to introduce Gamuda much. Most of the analysis done are about to what I believe. It owns toll concession assets - Litrak, Kesas, SPRINT. It is trying to sell its water concession - SPLASH.

Has many construction projects on hand - MRT2, completing MRT1, Pan Borneo  (to the tune of RM8 billion order book) and many are speculating the company is in very good position to at least get future rail projects such as Gemas-JB rail, East Coast Rail Line. Basically, this is one of the best construction firm in Malaysia and currently construction theme is still pretty hot.

Why I never got excited over Gadang

I have in the past provided my critical view on why I am not buying some construction stocks (not because of the companies are not well managed). The reason I am not doing so, is that I cannot see beyond the projects or order book that they have. One of the key measurement for a construction companies is "order book". That basically means how long more it can run the projects that it has gotten and by working out the margin that it is expected to get, we can probably provide a value to the company.

However for construction companies, their challenge is to continue to fight for projects. No one day they can sit tight and be comfortable with their business as it can be very volatile. As the order book starts to run out, they can get worried. If one is to read how IJM and Gamuda spread their risks, they went the toll concession and plantation route, areas where they can be defensive and more diversified while keeping their core strength.

Gadang is not really that company. I am quite wary when one pitch Gadang is traded below 10x PE blah and blah, hence it is very much undervalued. There is a difference between a stable, solid and growing business which is traded at 10x PE versus a company which has volatility and no strong sustaining business and traded at say 8x.

If one looks at Gadang, it has 2 main businesses (construction and properties) and 1 very small utility business - power plant. (I would probably love the business much more if I can say that it has 1 main utility business and 2 smaller construction and property business - it is unfortunately not.)

In fact, the composition of its construction, property and utility is something like 70:25:5. Gadang is a good contractor. It has managed to get good margins from this construction outfit but after operating for more than 20 years, it has never made its name to the size of IJM, Gamuda or even WCT. Its projects are much smaller than those guys.

At a market cap of RM850 million today, it is decent in valuation to its last year's profits but that's about all. If one is to look at many of my writings, I am a proponent of cashflows than profits. This however is on a case to case basis - which is why investing is not as easy as it seems. To give some strength to my argument, just look below. What people got crazy about is its net profit of RM95 million and its shares was trading at RM800 million - hence the PE of below 10x has been continually harp on. Does anyone however give a thought about its net margin of some 12% to 15% for a construction outfit. Is it non-recurring i.e. cannot be replicated often enough?

To provide a bigger thought, then let's look at its operating cashflow for the same financial period as below. I definitely am not comfortable with profit of RM95 mio but no cashflow.

Some portion of FY2016 cashflow statement

Several questionable events or numbers over the last 1 year

While it has been a decent contractor as I said, its corporate maneuvers are not so great.

Manuever 1

Private placement - 6 months ago, it did a private placement and in that event, it raised some more money at a price of RM1.85 per share. One is not ignorant that the parties who subscribed to the placements has made a healthy profit. It is however not the placements that I am complaining about. It is what the placement is for. As below mentioned, it is largely for property development expenses or land acquisition. This is the questionmark as the timing is not right. Why?

For Gadang to do this, why now? The company has not been a very prominent developer. If it want to do this, could have done much earlier - perhaps back in 2010 to 2013. Is the reasoning of utilisation came out of convenience?

Manuever 2

Whenever there is a private placement, and over the next 6 months, the share run, I could not help but to think that the investors want their invested money back. (I am SERIOUSLY not saying Gadang's investor or management is doing this, but I could not help with that thinking. Better be careful as I am dealing with my own, family and my friends money.

Manuever 3

Gadang is doing a bonus warrant. I have said before, I do not like the concept of bonus warrants. It feels like the company is trying to shore up its share price from nothing. Although I can be critical of bonuses as it is an accounting exercise, but those guys who do bonuses at the very least can brag that their company have been performing over the years, hence can afford to provide the bonuses by shifting numbers in the balance sheet. Bonus warrants is way worse - it is a call for traders to get excited - from nothing.


Any business is a business of building brand and solid strategy

If I have critical comment over construction or property businesses, I definitely cannot protect myself when I bought Tropicana and Ecoworld. These companies that I have bought if one is to look at the way they have strategized and worked out, they have executed flawlessly - especially in the case of Ecoworld. Today, as just announced Quek Leng Chan under Guoco has agreed to partner with Ecoworld International in its international part of business. Think about it, Quek would not do that if he does not believe in Ecoworld's management. In fact, Quek has been in the property business longer than Liew Kee Sin - and in this scenario letting him run and a certain extent control the business, is a big pat in the back.

I brought the above example is to say that for Gadang, I cannot see it being an exciting property business (for its size, it is not even a E&O which has several landmark properties). It is misleading to provide that Gadang will be one of the key beneficiary of the Kwasa Land project. It is a company that has been given a chance to proof itself being a Tier 2 developer. (You see for that piece, Tier 1 such as SP Setia, IJM etc are not even allowed to bid. There is a big difference between that story and actual fact)

What's dangerous for any Gadang's TRADERS?

For an investor, one would want to buy a business that can grow and with some strong sense of certainty, it will grow. The worry for Gadang is that one may have bought at its high and for this kind of stocks it may take a long time to come back, once it has dropped.

Just today, it announced a result that even surprised me. Despite this, my say is not to look at the quarter to quarter results - it is the underlying fundamentals and where it has protected itself in its business. Gadang has not done well enough in that category.

I would like to have a disclaimer, Gadang is not a bad company but can be dangerous for traders.