GMG Global   

The Hidden Gem

BullRun,

Thanks for sharing.

The market always carries risks. Ideally, all factors should be favourable....but in reality, this is almost never the case....therein lies the risks.

Well, lets see how this punt turns out. Below is TOMCON closing report for today.

Cheers!!!   

Tokyo Rubber Futures Bullish, Key Contract Hits 15-Month High

Tokyo, Oct. 29 (Jiji Press)--Rubber futures on the Tokyo Commodity Exchange gathered steam Monday with the benchmark, most distant contract climbing to a 15-month high. The April 2008 contract closed at 297.7 yen per kilogram, up 7.2 yen from Friday, after rising to a threshold of 300 yen early in the morning. This is the first time in about one year and three months since July 2006 that a most distant contract has climbed to 300 yen or above. Contracts from November to March were 6.0-7.5 yen higher at the close. Rubber futures got off to a firm start as bull buying grew in a buoyant mood carried over from Friday. Five contracts from December to April hit new lifetime highs at the opening. Sentiment further stiffened from late morning to afternoon amid continuous buying.

[ 2007/10/29 16:17 ]

 

 

shplayer,

Even if they sell in Euros...NR price is tag to the US$!!! GMG operating cost are mainly in euros, as mentioned in thier annual report, a strong euros will affect their profit..

Also stated in the annual report ..."Adverse impact on operating cost due to high oil price"....so having a high oil price may not be good for GMG since they already stated clearly that high oil price is a risk for them!!! 

 

 

BullRun,

Fall in USD is more than mitigated by higher oil price (support for NR price), rise in NR price and supply and demand positions. Furthermore, I think GMG's market is mainly in Europe, hence they sell mainly in Euros. 

 

Thanks. Will monitor closely. You not concern with the weak $US against Euro and S$?

 

Hi BullRun,

Just to let you know I just re entered GMG @ 12.0 cts.

Oil price at all time high, TOCOM prices also up but GMG price slightly down.

Tokyo Rubber Futures Higher in Early Trade

Tokyo, Oct. 29 (Jiji Press)--Rubber futures moved up in early trading on the Tokyo Commodity Exchange Monday. The most distant April 2008 contract climbed 2.5 yen from Friday, its first business day, to 293 yen per kilogram at the opening. Rubber futures were generally higher at the start as bull buying grew in a firm mood carried over from Friday. Five contracts from December to April hit new lifetime highs at the opening.

[ 2007/10/29 09:51 ]

 

 

shplayer,

That is Great!! Let me know the next time when you think is time to take position again.

 

Bullrun,

No worries, already sold.......resistance too strong at  13.5 to 14.0 ct. Take some profit first. Fight another day.

 

US$ continue to weaken against Euro....this will put some pressure in GMG earning...

 

shplayer,

By all measures that is very attractive return!!! I'm still not comfortable to take a position due to the high oil price, weakening US$ against Euro and the flat NR price...not too sure about weather conditions....will continue to monitor for now!!

 

Bullrun,

When I made my posts in early Sep, GMG was about 11 ct. Now, about 1 month later, it hit a high of 14.5 and support at 13 ct.

Not fantastic returns for 1 month but not too bad. (18% to 32%)

Of course, considering oil price pull back, the prospects of rubber price increase is diminished. So, if I were to make my entry at this level (13 to 13.5 ct), I will be abit cautious too. However, yesterday's TOCOM report was positive for rubber and may signal the upturn of rubber price again. Also note that physical rubber inventory remains low.

 

 

NR price rather flat together with the weakening US$.......still not vested.....

 

Strong movements...good volumes! Still Not vested!!

 

Looks like on the move....midday close 14.0 cts (+2.0), vol 7,343 lots

 

Interesting news, from AFP/CNA 14/9... rubber tyres will have to come from somewhere...:P

"with expected growth in the Brazil-Russia-India-China (BRIC) passenger car markets ranging from 50 percent to 117 percent, those markets would provide more space for future growth than saturated European markets, Equinet's Schuldt added..."

 

Activity increased from 1505 hrs.

 

agree with bullrun. to be conservative, the eps in FY 2007 could be around 0.8 cents, assuming the same high NR price in 1H 2007. thus the safe price could be 7/8 cents per share.

 

shplayer, Thanks...I feel comfortable with a 07 EPS of 0.9-1.1 cents. Last year EPS was 2.2 cents and the share touched 21cents...implied market willing to pay a PE of about 10....so at current price, GMG is already trading at about PE 10 based on 07 earning.. upside seems limited now unless the NR price strengthen over the next few months!

 

Hi Shplayer, thank you for your sharing :)

 

 

Just like to add, this is a pretty conered stock. According to 2006 AR

Holders of > 1 million shares.........89.49%

Top 20 shareholders.................    85.38 %

 

 

Bullrun,

Ok, if weather is in their favour, and they are able recoup the some of their losses in revenue from the the 'small holders/ out growers, and if their Indo investment starts to contribute from Aug 07 (as was stated in their announcement), coupled with the firmer NR prices, my guess is H2 07 may come in between 0.8 to 1.1 ct per share. (very rough estimate) making FY eps of between 1.1 to 1.4 cts.. This stock is backed by NAV of 12.6 cts.

My primary consideration is the firmer rubber and oil prices. The latter will drive the the price of butyl rubber thereby keeping NR prices up. 

Nothing is certain; my vesting is based on my personnal strategies......I treat GMG as a 'short term' (by my standards=> up to 6 mths) punt.

Not an invitation to commit to GMG.....just sharing my personnal opinion.