Wednesday, May 26, 2010

So What Is OSK Saying Now About MMC

Blogged this morning. Comments On MMC Earnings

Just got a copy of OSK latest report on MMC.

Here's OSK comments.

  • MMC’s results disappointed again, pulled down by continued losses at Zelan and high tax and MI rates. While we expect the high tax and MI rates to normalize, the disappointment at Zelan leads us to forecast zero associate earnings for 2010 and strip out Zelan from of our Sum of Parts value for MMC. Due to the lower net profit forecast (down 5%-6%) and a higher attributed WACC due to market volatility, our SOP fair value is reduced to RM2.54. Nonetheless, there is still value in the company, and the upcoming 10MP as well as hopes for expansion of the Tanjung Bin power plant prompt us to maintain our Trading Buy call.

So it's Zelan's losses, higher tax rates and MI rates.

It's not the fault of the researcher who had assigned such incredible earnings forecast of 424 million.

Yeah, MMC is only expected to see an earnings growth of ONLy 79.3%.

So if MMC disappoint, it's not all MMC's fault and not the fault of the researcher who assign such an incredible earnings forecast.

Hey, researcher cannot be wrong, yes?

Now here comes another incredible thing.

MMC only earned some 34.3 million for the first quarter. OSK did revised down the earnings forecast for MMC.

Earnings estimate fell from 424 million to 399.1 million. Yeah, OSK downgraded the earnings estimate to 399.1 million.

Yeah, after MMC earnings on a Q-Q basis fell from 107.7 million to 34.3 million, OSK still expects MMC to have a yearly growth of some 68.6%!!!


No wonder MMC is still considered a trading buy despite having its target price revised down from 2.80 to 2.54.


Let's see.. one year has 4 quarters. First quarter MMC only earned some 34.3 million. To reach 399.1 million, MMC needs to earn some 364.8 million for the remaining 3 quarters!. Oh, this equates to roughly an earnings of rm 121.6 million per quarter.


Good or what??!!


solomon said...

I am not sure they still own Sime Darby or sold off. Like other posting, this company seemed to me, need to be more focus in their core biz and shore up their biz margin. Not necessary getting contract is good deed.

Since when they could stop to blame Zelan negative contribution?? Why you need Zelan, is it becoz of IJM stakes??

Higher tax rate, why you want to venture into that country, no tax planning one meh?

Roll some head to show you are genuine to seek excellence??

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Moolah said...

snowball: done and many thanks! :D