Since when its CEO selling his stake, it is going down the hill since then.

Personally won't touch on those shares that its CEO, MD or major shareholder is selling their stake in the company.
If they have confidence and view the company's future is bright, then why they are selling it?
They have more inside view of the company than everyone else.

Just my personal preference and opinion.

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.

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

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.

This statement we need to interpret properly.

What is low? Compared to peak previous achieved? Then this definition low can be very misleading.

You look at a long term chart, Gamuda most of the time is range bound in 1.60 - 2.50 for this lastest 5 years. It only break out to 5.00 last year or so until recent plunging down.

With economy slowndown, construction is always on the front line to be experiencing the effect.