Spring Gallery Berhad, formerly known as PFCE Berhad is engaged in manufacturing and distributing pottery and porcelain products, ceramic wares and ornaments. The company is also transitioning towards a new segment in the construction and property development sector.
Google Finance: KLSE:SGB
Substantial shareholders as at 30 Sep 2015:
- Greenfield Hills Sdn. Bhd. (30.91%) - Indirect interest of director
- Kuan Poh Huat (9.09%) - Director
- Innofarm Sdn. Bhd. (7.34%)
| Valuation | SELL |
| Current price | RM 1.22 |
| Shares outstanding (approx.) | 156,750,000 |
| Market cap | RM 191.2 million |
| Fair value | RM 0.59 |
| Margin of safety | -106.8% |
HIGHLIGHTS
- The director's strategy
- How not to fall for a trap?
- Is there still opportunity for entry?
ANALYSIS
Financial Ratios @ Reuters: SPRI.KL
Please note that I have computed all ratios reported below from
original sources unless stated otherwise. For other various ratios,
please refer to Reuters.
The director's strategy, how not to fall for a trap?
There are large players in the market. The daily traded volume over
the past 4 trading days averaged SGB's averaged 227.4 thousand lots,
more than 10x higher than the average in the past 30 days.
To understand the entire process, please refer to Google Sheets; there are 2 sheets, "Valuation" and "Procedure". Note: I reserve the rights to take down this document at anytime.
To summarise, the directors will accumulate the stock and dispose the
options. This is supported by the directors' transactions announced on
22 and 25 April 2016.
Exclusive disclaimer: I
may be wrong in this entire elaborate "pump and dump" model, or I may
be wrong in terms of the person manipulating the market. Either way, I
have no intention to create market panic/greed; but technically, both of
these elements are very much present in the SGB market. I also have no
intentions to accuse the director's of insider trading, it is merely
personal cost saving motived, like you and me. I am simply excited to
share my findings because this volatile situation can be explained by my
scenario!
VALUATION
Fair value of RM 0.59 for SGB. This translates to a Black-Scholes
pricing for SGB-PA and SGB-WA of RM 0.125 and RM 0.076 respectively.
Margin of safety for SGB, SGB-PA and SGB-WA is -106.8%, 19.0% and
-268.4% respectively.
SGB-PA is the best bet among the entire SGB family; but take note that this is also good for the director's disposal.
Thank you.
Shaun Loong
All content are obtained from sources
which are deemed to be reliable. I do not guarantee the accuracy,
completeness or timeliness of the information nor can I be held liable
for any losses arising from the use of information provided in this
article. Valuation, if any, is decided based on:OVERVALUED - margin of safety less than -25% at current price
FULLY VALUED - margin of safety between -25% to 25% at current price
UNDERVALUED - margin of safety greater than 25% at current price
SGB (7165) - Spring Gallery Berhad SGB’s Market Volatility Explained?
https://megamicrocaps.wordpress.com/2016/04/25/sgbs-market-volatility-explained/#more-2765
