At PE 11.3, it doesn't look cheap for a stock that almost all already known its profit will going to fall.

For construction stocks and properties stocks, their profit can fall quite drastically if market condition turns sour, a 30-40% drop in EPS is norm in difficult period. So at 11.3 previous year earning, its PE can easily go up near to high teen number if EPS fall more than 30-40%.

Jusy my opinion though. I never like construction, highly volatile, unpredicatable, and high political link (for some).
I prefer properties play.

The whole construction sector is bracing for a price increase this week or next ...

Yeah, I agree with you cherroy. That was why I mentioned that we would see the EPS for Gamuda at around 16 sen this year. That is a 28% decrease, which was in line with the industry norm. Volatile it may be, but the potential for increase in earnings is also huge. At current price of RM2.43, it is a nice ROI of 6.6%

Are you referring to the price of materials or the price of shares?

i bet before year end will hit my target price 2.00

Still at 16 cents, it implied around PE of 15, which is not cheap (just a fair value) by market standard or market average.
Genting is cheaper than that with PE around 13. Anyway, not fair to compare, as it is apple and orange if compared with different industry.

What I mean volatile is their financial report which can swing both way quite extreme depends on economy situation which eventually reflect on share price movement.
Sorry for the mis-understand part.

No doubt, it is hardly beaten stock but not without the reason. As there is not possible for share price to sustain at RM4-5 level with EPS of 16 cents. May be that's the reason why its MD sold his signficant stake of it because of overly rich valuation of share price at RM5 he saw.

You need improvement in economy situation eventually for construction industry for Gamuda to stage a return which in near term, highly unlikely. Some rebound in share price may be after being beaten hard, but not huge move. Anyway, this is across the board also, not only Gamuda.

Just my opinion though.

This post has been edited by cherroy: Jul 16 2008, 09:41 PM

I think if you want to buy as investment, gamuda is definitely out as there are a lot of uncertainties. y the CEO want to reduce his stake . Are you sure it is just because of valuation? PER to high?

Or there are some more othere issues. But for the CEO suddenly reducing the stack there must be something not right. Is very risky.

If compare Gamuda with other construction outfit, it is one of the highest traded stock with huge volume. If you can stomach the yoyo stock value in these unpredictable time, it is a good stock to profit on the rebound. A pity Malaysian stock we can sell short.

My view is what if it happened to be like transmile? The director eat money

My view is the same too, basically something not right with the company.

Because directors / large shareholder rarely dispose their shares in large stakes, because that will affects their reputation and investor's confident.

We have no clue why its MD wants to dispose his shares, even he didn't give propery reason (except he said for personal asset allocation issue) which it is up to anyone to speculate. Generally I don't want to comment on something that it is speculative or we have no clue what is happening, it is much fair, right?

But having said that, most of the time, whenever the company CEO or directors or substantial shareholders that involved in company management one are disposing their stake signficaintly in open market, it is better or advisable to stay out most of the time as they have the insight of company and they knew what is happening on the company businesses side and first hand information about the company future, (may be sometimes exceptional due to some special issue).

On the previous you qouted, I am just commenting based on share price alone, which at Rm5.00 even without its MD disposing his stake already a expensive stocks to be held.

But for sure, it is hard to see where the long term future currently, which is part of the reason why this stock swing so drastically because people have no way to evaluate it especially with construction sector might face a long winter. For trading buy, it is different story than for long term investment. For me, the most I can see it is a short term trading opportunities for time being because the big swing in share price. For traders, what you want is the huge price differentiation (price swing up and down) which enable to make money out of it. Staying at a range bound price, then for sure, traders and speculators have no way to gain from it for short term.

PS: Personally I never like construction stocks for really long term investment due to its nature of business. In fact I prefer properties stocks compared to construction stocks if really want to go in this sector. Just my preference and opinion, doesn't necessary right.

Well if you compare the construction indices for the past few weeks, it is growing as a market in whole with Gamuda leading the pack. It may not be a good long term stock but maybe we can profit a little here with some proper timing

the MD was disposing at Rm3.++ from the peak of 4-5...now the rate at 2.50+-..it depend how u rate the company...

Me too. Construction stock is out of my list. A lot of speculation.

after a jump from 2.3 to rm 3...now dropped 23c to 2.79...whats going on la with this stock....

take over tak jadi ka? heh heh..

This post has been edited by asambuffett: Aug 19 2008, 12:11 AM

Basically Gamuda is more on speculative play nowadays as the CEO already disposing his shares like what i mentioned before. So during uncertainties the stock price cannot hold ...

red against..

jia lat ~~~ should i throw it now ???

What is your intension to buy this stock in the first place? Invest for long term or speculate on the price.

If you speculate maybe you can throw now.

If you buy it for long term investment . Then why you want to throw it during price weakness?

I believe GAMUDA's privatisation by middle easterns is still in the cards. It has one of the best presence in middle east, building infrastructures and other developments with them. So, they can privatise and own the company's experience to gain themselves.
Therefore, you could still average on the price on weakness and wait for the news to be announced.
But the final decision is still up to you.

for long term also not very good:

http://www.reuters.com/finance/stocks/over...?symbol=GAMU.KL