It's incredible really.
How them local so-called experts had been raising their targets left, right and center. And sometimes we really wonder if the size of the upgrade is really worth the justification given the time frame and reasoning mentioned.
But then, some would point out that it's quite clear that the bulls are in charge and they dearly wants them stocks to move higher to the North Pole.
LOL!
And yeah, some cows can do pole dancing too!
On Business Times, there was an article which tried to republish what OSK said in its consumer sector report, Consumer product, retail stocks shine
- OSK says retail sales will recover gradually towards the year-end, boosted by the festive seasons and mega sales campaign
CONSUMER products and retail stocks like Parkson Holdings Bhd, Hai-O Enterprise Bhd and AEON Bhd were traded higher yesterday, after OSK said retail sales will recover gradually towards year-end.
"While we expect another soft quarter in the second quarter, it would be better than we anticipated earlier, given the rally in the equity market and the more positive overseas economic data in June.
"We believe retail sales will recover gradually towards the year-end, boosted by the festive seasons and mega sales campaign," said OSK Research in a report yesterday.
Four out of the 10 top gainers were made up of consumer products or retail related stocks, including Nestle, which added 5 per cent or RM1.50; Parkson, which rose 4.4 per cent or 24 sen; Dutch Lady, which added 1.8 per cent or 20 sen; and British American Tobacco, which climbed 1.5 per cent or by 70 sen.
Shares of Padini, NTPM, Hai-O and AEON, which is under OSK's coverage, also went up by between 0.4 and 3.3 per cent yesterday, which is in line with the benchmark index FTSE Bursa Malaysia KLCI that rose 0.7 per cent.
OSK placed a "buy" call on Parkson and Padini, with a target price of RM6.60 and RM2.94 respectively, while remains "neutral" on stocks like Hai-O, AEON and NTPM.
The research house also expects retail sales recovery to be more apparent in 2010, driven by an anticipated stronger gross domestic product data in 2010, with anticipated lower unemployment rate due to improved business sentiment, rebound of the equity market and positive news flow from overseas, among others.
"Car sales had shown consistent sales growth of 9 per cent over the last three months, while mortgage home loan approvals, which are a leading indicator of home sales, had gone up significantly from March to May this year.
"Although property and car sales are not directly related to retail sales, their rebound nonetheless suggests that consumers have started buying big ticket items, thus boosting demand for consumables which are much cheaper," it said.
It also added that significant margins erosions for retailers will be less likely in the second half, and that the A H1N1 pandemic would have negligible impact on the retail industry.
Hmm... the justification or the reasoning was that "retail sales will recover gradually towards the year-end, boosted by the festive seasons and mega sales campaign."
Now that is a solid justification..... but.... but... butt.... my dearest, do look at the key word, which is recover gradually.
No promises but there is a likelyhood that it could recover gradually.
And we aren't even talking about massive growth. Just the plain 'gradual recovery'.
So now think outside for a moment. If one is NOT in the sector, do we want to buy in?
And if we do, don't we want buy to buy them stock at a cheaper price (to mitigate the risks) and not chase the stock as if tomorrow never comes?
No worries they say, buy higher sell higher yo! Buy the momentum!
Yeah, it could work but what if this simple reasoning falls short? Would you then turn into a long term investor due to the wrong reasoning?
Let's take a look at Parkson Holdings. I chose this one simply because there was quite a lot of postings on this stock already. For example, the following posting was made on Monday evening. Life Is Grand For Parkson Holdings
Now as I had said Business Times tried to republish or reproduce what OSK had said. Sometimes such republications is not accurate. Take a look at the red bold statement.
- OSK placed a "buy" call on Parkson and Padini, with a target price of RM6.60
Ah.. I remember jitseng asking for fair reporting. :D
Now the statement itself is accurate..... but... but... but..... butttt..... it's not FAIR reporting.
OSK had only started coverage on Parkson on 4th June 2009.
Parkson was at 4.84 and OSK calls a BUY with a target of 5.50.
Fair enough.
Yesterday, OSK published its 'consumer sector' report. It had to included Parkson, no?
Now Houston we do have a problem.
Parkson Holdings is now 5.47!
What to say? What recommendation to give Parkson?
Well, this is what OSK wrote.
And so Parkson now have a TP of 6.60.
Now this is where Business Times could be more accurate and practise some fair reporting. This 6.60 is an upgraded target price from 5.50. A target given just less than 2 months ago.
Oh yeah, Parkson soared yesterday too! LOL! It closed at 5.64. The boss could be mighty happy because there is a chance for him to dispose more shares at a higher price! See the share disposals mentioned in the posting: Life Is Grand For Parkson Holdings. Would he be selling more? Would he? Let's hold our breath and wait.
Now back to issue of buying Parkson the stock.
Let's discount the fact that while we buy, the boss could be disposing more shares.
Let's have a look at where Parkson the stock is at right now.
And this is where Parkson is at today.
OSK is asking you to buy because it thinks because of the chances of 'gradual recovery' (mind you and not massive growth reasoning), consumer stocks like Parkson is worth a buy. It reckons it could be worth 6.60.
Just ignore the stock used to trade in the low 3.00s back in March.
That's the past.
Stock markets don't look at the past. They look at the future. And the future as OSK calls it, the stock should hit rm6.60.
How now my dearest?
You buy this?
And what about the time frame.
Isn't it a wonder?
2 months ago this company is worth 5.50. Now it should worth at least 6.60.
Why do a company's valuation change in such a short time frame? Why?
Or does the stock market sentiments rules over the company's valuation?
Market hot means the stock should be worth more?
How now?
Posts
3 comments:
Dear Moola,
Yes, market sentiment definitely governs the price of shares. Almost every investor (big or small) is a share analyst. You do your sums (by whatever method), comes up with a figure and you place your orders. Big institutions even have a band of analysts.
In March 2009, there were both buyers and sellers for Parkson at RM3.00. Does it can be said that Parkson was perceived to be worth RM3.00 at that point in time. Today Parkson is worth RM5.50. That is market sentiment at work.
OSK's price of RM6.60 is a projection into the future. Good question, why no time frame. Is that price achieveable - wait and see.
If share price is controlled by some other thing like say the company's NTA, then there would be very little movement. How boring that would be.
Anyway, good work on the piece Parkson is Grand.
lps
Life sure is grand when one dictates which stock and what price. :D
On the following article...
http://www.theedgemalaysia.com/business-news/146523-osk-research-maintains-sell-into-strength.html
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OSK Investment Research said just as it had cautioned that the market rally which started in April may run out of steam before triggering its sell into strength call towards the 1,150-level, global markets rallied in mid- July, ploughing double-digit gains as the US results reporting season came in above expectations.
As for the FBM KLCI, it was no exception, rallying past the research house's calendar year 2010 fair value of 1,150 and marching towards its projected high of 1,190 points.
With RM10 billion being raised for the Amanah Saham 1Malaysia, it said there might be an influx of funds into the market to absorb any potential profit taking. The second-quarter (2Q) results season may also see more upgrades than downgrades.
As such, despite its view that the FBM KLCI was significantly over-valued, the research house said the 30-stock index may continue to advance or sustain at the current level for a few more months although ultimately a retracement is inevitable.
"A delay in awarding CONSTRUCTION contracts will also keep investors hoping and not rush to Sell on Fact," it said.
On its strategy for investors, it advised an overall sell into strength stance although selected stocks remain good buys for now. With three out of its Top 5 picks in July outperforming the FBM KLCI, it was generally maintaining its strategy of having mixed cyclical and defensive stocks in its basket of Top 5 stocks ..............
Based on current earnings estimates for the FBM KLCI, the market is trading at above 17 times CY09 earnings and close to 16 times CY10 earnings. While the FBM KLCI does appear to trade historically at a slightly higher average price-to-earnings ratio (PER) of 16 times versus the KLCI's 15 times average PER since 2000, it deems the over 17 times current PER excessive.
"We also note that the FBM KLCI components were trading at a PER of 15.5 times in CY06 and CY07 when earnings growth was averaging 30%. As such, with an earnings contraction in CY09 and projected growth of only 12% in CY10, we deem the current PER excessive," it said.
With the 2Q results reporting season starting in full swing in August, it also took a sneak peek into how the results season may turn out.
Comparing our 140-stock coverage with consensus forecast, we have been generally more pessimistic than consensus, with our full-year FY09 forecast more than 5% below consensus for 39 stocks, but more than 5% above consensus for only 20 stocks.
It was generally more cautious than consensus on the steel and auto sectors. As such, there was a higher probability that it may have more upgrades than downgrades during the upcoming results season, which may provide some support to the market.
Nonetheless, despite the possibility of more upgrades, it did not expect there to be sufficient upgrades for it to significantly raise its FBM KLCI fair value to justify its currently rich valuation
>>>>>>>>>>>>>
ps: Isn't Parkson one of them that benefited from FBM KLCI? Previously it had zero weightage.
so it's a sell on strength... but.. but.... butttt.....
the article then continues....
Given the number of profit adjustments in July and the switch-over to the FBM KLCI, it was tweaking its earnings forecast numbers for the FBM KLCI components. The CY09 earnings forecast was raised from a 7% contraction to a 6% contraction while that for CY10 is increased from 10% growth to 12% growth.
"We maintain our KLCI fair value for now although we note that the market is increasingly willing to accept valuations based on 2010 numbers, given the optimism of a general economic recovery in 2010. Its 2010 fair value for the FBM KLCI was 1,150 versus its 2009 fair value of 1,040," it said.
"We continue to advocate an overall sell into strength strategy as we view the market as being overvalued. However, given the likelihood of an Edwardian summer unfolding as we highlighted, the market may not see a sharp retracement for some months.
"As such, there is still room for selective stock picking in the context of an overall overvalued market. Cyclical sectors such as oil and gas and steel remain overweight while defensive sectors such as rubber gloves, gaming and consumer food should increasingly receive attention," it said.
As OSK Research maintained its stock-picking strategy amidst a general sell into strength call, it was keeping its top picks intact.
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Ahhh.... sell on strength except for defensive/consumer sector.
Confused. As usual when it comes to OSK. LOL! Sorry I am pure lousy for I cannot understand.
One on hand it views FBM KLCI valuations to be excessive.
But on other hand, it chose to think otherwise on the consumer stocks.
And it chose to raise Parkson, a fbm klci stock, from 5.50 to 6.60 after just 2 months.
Which means that OSK gave a FBM KLCI stock a valuation upgrade by a massive 20%. Err... feeding the fire? lol.
Hmmm.... how? One hand says sell on strength. Other hand says buy consumer stocks. ( And hasn't most consumer stocks rocketed in prices?)
Ohhhh man... I can't play such game.
:D
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