Wednesday, November 23, 2005

TITANic Bull!


It's just normal.

Just prior to their listing, during their ipo period, these companies would promise their prospective investors heaven and earth. Bright future prospects with optimistic earnings growth.

And of course, needless to say, their merchant bankers, marketing their ipo, were just as optimistic.

Oh... i am toking about Titan Chemicals.

Here are some of the optimistic claims made on the local news media.

Friday May 27, 2005
Titan confident of meeting 2005 profit forecastY

TITAN Chemicals Corp Bhd is optimistic that it can meet its net profit forecast of RM604mil for the financial year ending Dec 31, 2005.

“Based on an annualised first quarter net profit, we have exceeded the forecast,” said chief financial officer Fauzi Ghani at a ceremony to launch the company's prospectus in Kuala Lumpur yesterday.
After being listed, the company made its 2005 Q2 earnings report on Aug 25th. It reported a net profit of 111.326 million for the quarter, giving it a year-to-date total net profit of 270.585 million.

And of course the company was very upbeat the day it released its earnings.

This was one of the headliners.

Friday August 26, 12:38 PM

Malaysia Titan sees strong profit margin until 2009

KUALA LUMPUR, Aug 26 (Reuters) - Malaysia's Titan Chemicals Corp said on Friday it expects its strong profit margin to continue until 2009.

Managing director Donald M. Condon Jr says Titan Chemicals has been largely unaffected by the surge in oil prices because it is able to pass growing costs to customers
And here is a snippet of another article.

Titan on track to meet financial goals
September 5 2005

TITAN Chemicals Corp Bhd, Malaysia’s largest petrochemical company, said it remains on track to meet or exceed its financial goals for the full year, allaying concerns over the negative effect of higher oil prices on the company.

Titan announced its 2005 Q3 earnings last nite.

Net profit was 71.914 million (the previous quarter it made 111.326 million! Ahem!), giving it a total net profit of 342.499 million.

Ahem.... one quarter left for the fiscal year... and they had just promised not too long ago that they can boleh-out a PROMISED net profit of 604 million to their ipo investors.

Let me put it clearer..... 2005 Q4 net profit + 342.499 million = 604 million wor.

Which means...2005 Q4 net profit should be around 261 million.

Ahem... which looks very, very unlikey.... prompting Titan to fast-fast sing-out that
it may not meet its 2005 IPO forecast. In fact it now warns that net profit for full year 2005 may fall 25% to 30% below its initial public offer (IPO) forecast of RM604.1mil.

Like this how cannnnnnnnnnnnnnnnnn??????

Belum listed, they can promise all the sweeties in the whole world.

After listed.... ahem!

Here is a table from OSK during Titan's ipo.

Fair value of RM2.50Applying our fair PER of 7x to CY06 EPS, we derive a fair value of RM2.50.

That above table was from OSK.

1. Look at net earnings row.
See 2004 ~~~~~>>>> 2005.
see how net profit TITANICALY ROSE from 262.2 mil to 604 mil? LOL!!! Dun u forget, this was Titan's promised earnings wor!

2. see how OSK priced the IPO? It assigns a fair value of 2.50 based on Titan's projection to make a net profit of 624 million for fy 2006.

Ahem! Simply TITANIC cause now Titan is saying (warning) that it may not even meet its 2005 net profit forecast.

If 2005 tak boleh, then 2006 boeh ka?
If tak boleh, then what does this means about the IPO price sold by Titan to their IPO investors?

Titan is now trading at 1.49. IPO price? Errr.... if not mistaken was 2.17 wor!

How can?

See how the game is being played?

It's like when we go pak-toh-ing. During pak-toh, everything olso can. But after that, if and when we get Mary, ho ho ho..... !!!!

So next time got new IPO...
better see properly first lah b4 we say 'I wan! I wan!'

Tiok boh?


ichithekiller said...

Hi Moola,

You forgot to mention this Condon dude recently awarded "CEO of the Year" ... and what was the key reason he gave for not being able to meet profit forecast? "Rising oil prices...!!" Go figure man...