A good trade has to do with inherent value and timing. It has little to do with ongoing business or recurring earnings attractiveness. If you are Buffett you can buy this stock and hold for 1 or 2 years before getting full value as you know something is bound to happen to the stock during that period which will unlock value.
Otherwise, if you are patient and can be diligent in noticing percentage change in volume and share price, you could get in for a good trade.
If you look at the movements in Gopeng, you can see some abnormal activity. You probably have to be very "inside" to get any shares below 90 sen, or you would have had to be holding them for months or even years.
The sustained price movement and the gradual build up in volume, with minimal contra selling or big blocks of selling tells me this is a corporate exercise kind of stock.
Gopeng is in plantations but also a share of business in Perak Hanjoong Simen. They generally make RM2m-3m net each quarter closed eyes. The last quarter saw net profit being bumped up by a sale of land by Perak Hanjoong Simen of which Gopeng got nearly RM7m extra profit.
Gopeng's assets is there but its revenue and profits are pathetic, but they will survive. Their real value is in their overall NAV, which is attractive to many big investors or listed companies. They have about 179m shares paid up and at RM1.00 its market cap is RM179m.
Their total assets is RM303.7m. Total liabilities is RM32m. Net = RM271m / 179m = RM1.51.
I wouldn't even touch Gopeng as a business but as a company to be sold off, its very interesting. Any kind of offer will have to be close to RM1.50 the minimum. If you were controlling Gopeng, it looks best to sell the company to the highest bidder because judging from their track record the current owners have no interest to grow the business.
Hence the perk up in volume and share price looks very decent, should be good for a trade.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
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