Wednesday, April 7, 2010

GMG Global: A Hot Stock But Why?

I dont believe in technical analysis but the common sense view is that GMG Global is overbought, with the latest frenzy occurring due to another writeup on the company by BT's Ven Sree. This writeup is more provocative as he goes to label GMG Global as possibly the next - gasp - Wilmar International.

The rest of his piece was stuff he used in an earlier writeup in January on why he thinks GMG Global is poised to capture the Chinese natural market, particularly Sinochem International as its controlling shareholder and the fact that China has limited natural rubber resource.

I am not complaining that GMG Global's shares have risen too fast. However, my mind is conjuring images of buying by funds of large blocks of shares in the company. Call it coincidence, but after the piece was published, GMG Global put up its presentation slides for a Shanghai roadshow. This indicates that the writer is aware of the company's roadshows, probably because GMG Global's corporate communication or public relations has been in contact with him or has invited him for the media cocktail or luncheon.

This is no mean feat, but what takes the cake, was that he managed to slip in a writeup on the same company twice within 3 months! Other than those news pieces, I hardly see a promo piece on a particular company in BT's Hock Lock Siew appearing more than once in a short span of time. More often, rants targeting SGX's market regulator cum operator status gets such airtime. Or some corporate scandal that is really juicy, which almost often involve the beleaguered S-Chips.

For those who like me have been vested in the company since last year, congratulations for the moment. For those wanting in, I am only fearful that GMG Global's excessive valuation will only make life for your portfolio harder.
GMG Global's long term prospects need no regurgitation as Ven Sree's piece says it succinctly. More PRC cars, higher demand for natural rubber, very resourceful and influential controlling shareholder. Short term correction will definitely occur once settlement date approaches and contra trades are settled. Based on my counting, it should be say 5 trading days from yesterday, where again you can see the crazy number of shares change hands.


  1. Congrats on big big huat!

    I saw it on your blog few days ago when I chanced upon your blog, but haven't had time to look through it's balance sheet and business... to my detriment :(

  2. no huat till you sell..

    anyway i think i held it long enough for things to happen... not really a big position to begin with but let us just see how things play out.. especially now that it is going on so many a corporate presentation.