sell buy or hold?

why?

Glomac is trading below its NTA. Is Glomac a value trap?  A value trap is a company that appears cheap but is cheap because of poor business fundamentals. Does Glomac fit this criterion? Is the market suggesting that there is going to be a significant impairment of its assets?

To be able to answer the value trap question correctly, you have to look at its business fundamentals. I have some thoughts on the fundamental analysis of Glomac. Go to Is Glomac a value trap?

Is Glomac a value trap?

The earnings of property developers have been declining over the past few years. This was due to several measures by the government to reduce property speculation. Covid-19 aggravated the situation. The performance of Glomac was similarly affected.

But Glomac has a profitable track record and is financially sound. I expect the business performance of Glomac in the coming years to improve. Together with the expected improvement in the market sentiments, the market price of Glomac would be much higher than what it is today.

The market price of Glomac is currently below its intrinsic value. This is from the perspective of the Asset Value, Earnings Power Value, and Acquirer's Multiple. 

For a company to be a value trap, its low price must be due to poor fundamentals. In the case of Glomac, the analysis does not indicate poor fundamentals. The intrinsic values are significantly higher than the market price. I would not consider Glomac a value trap. 

For more insights into Bursa companies, go to “Are these outstanding stocks - what to consider? (Bursa Malaysia)”

The Bursa property companies had a tough few years. Covid-19 affected my companies in Malaysia and the property companies were no exception. But the problems for the property companies started long before Covid-19 with a soft market that began with the govt efforts to curb speculation in the 2016/17.

But I think there is light at the end of the tunnel and as such many property companies could be under priced from a fundamental perspective. One example is Glomac that is currently trading at a discount to its intrinsic value. It is not a value trap. You can read about it from page 19 of the newsletter.