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Tuesday, February 18, 2014

GBH- time to get out of the gutter!

Background

Gooh Ban Huat Bhd (GBH) is involved in the manufacture and sales of ceramic wares, ceramic formers, and pipes. A check on the company's website reveals that it has 4 divisions: tableware by Crown Lynn, GBH Clay Pipe Division, GBH Ceramic & GBH Bathroom. However, investors who look at this stock is only interested in one thing: When is GBH going to develop its 5.92ha of prime land in Segambut?

Historical Financial Performance

A look at GBH's 16-years financial performance reveals more missed opportunities & successes. One wonders how Signature group which is involved in the production of kitchen cabinet & wardrobe can ride the property boom so well while GBH cannot. Anyway, that's about to change under the management of Robert Tan who took over the company in 2009 (here). Robert Tan bought into GBH at the price of RM1.50 per share.


Chart 1: GBH's last 16 years results

Financial Position

GBH is a financially healthy company with current ratio stood at 10x as at 30/9/2013. Instead of bank borrowings, it has cash in hand of RM44 million or 24 sen p.s.

Technical Outlook

GBH broke above its strong horizontal resistance of RM1.30. If the stock can stay above the RM1.30 level, it may launch into an uptrend.


Chart 2: GBH's weekly chart as at Feb 17, 2014 (Source: Tradesignum)

Conclusion

Based on positive technical outlook, promising prospect of re-rating (on news of redevelopment of the Segambut land) and healthy financial position (albeit unimpressive financial performance), GBH could be a good stock for a trading BUY.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, GBH.

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