Wednesday, April 27, 2011

The What IF Blue Sky Valuation Strikes Once Again

And ................. OSK strikes again!

Slightly more than a year ago, on March 2010, OSK wrote a report on MMC. Their head of research introduced a brand new yardstick called Blue Sky valuation.

I kid you not!

Let me reproduce what was posted on March 2010: OSK's What If Blue Sky Valuation!Today the same writer is pulling the very same stunt!

Truly amazing la.

Is it too much asking to ask the writer to come up with a better seduction method? As it is, it's rather same old, same old.

Anyway, what do we have?

Today we have What IF.

Oh, he added the BLUE SKY valuation!


I kid you not!

I guess this is the first of the kind in the world.

Ho ho ho ho!

Mr. Blue Sky!


First he states the risk in one small passage...

Then he comes out with his gun banging...

So if my Blue Sky comes, the fair value is rm 3.26. Else it's a plain boring price of 2.41 with an un-seductive target price of rm 2.80!


And so how did MMC fared? Well apparently it was cloudy and Mr. Blue Sky was not to be found: Comments On MMC Earnings

And the remarks on MMC's earnings was remarkable. So What Is OSK Saying Now About MMC

And that was then.

Now is 27th April 2011 and OSK head of research is now no longer talking about Mr. Blue Sky. Instead it's the CROWN JEWEL...

ps: Naturally the SOP (sum of parts) value is increased.
A good trade. With Syed Mokhtar definitely appearing to be in the good books of the government currently, we do expect that it will only be a matter of time before something comes MMC’s way. As such, we maintain our Trading Buy call on the company with our SOP fair value unchanged at RM3.62.


Mun Wai said...

Is the Company going to be so profitable? OSK FY11f is RM430.2, increase by a whopping 260% y-o-y.

Moolah said...

If you follow the posting and the subsequent postings, this is exactly what OSK did (give such high growth estimation) and you would also find that MMC had failed to deliver.

Which is not a problem for OSK cos all they need to do is .... blame on MMC. Yes, they just blamed it all on MMC and say they were let down.


Yes, it's never ever their problem for making such overly optimistic estimation or create an incredible yardstick such as MR. BLUE SKY valuation.

See? Life is good.

Mun Wai said...

Furthermore, it is on the back of dwindling profits in the immediate preceding years, 2 consecutive years .

It seems to me that the writer does not bother to care about his reputation, the damage. Not embarassed at all? Forecasts (unrealistic forecasts)consistently deviate so much from the actual results. (Look! consistency found here)

(Typo error on the number - RM430.2 m, yes, I ate the mil)

Moolah said...

Mun Wai: This is the very same one that wrote on Timberwell

It was incredible.

Everyone knew then that Timberwell was on the wok. ( Yeah the wok!)

It had no earnings. It was losing money. And it was stir fried on a bright sunny Blue Sky day.

And yet... he managed to release a report giving it a 20% price target.

The next day... the stock plunged.

No joke.

And I was told.. the report somehow could not be found on OSK website a few days later.


Mun Wai said...

We have creative accounting where crooks cook up books ; then here comes the "creative investment research" from ... Conscience eaten by dog!

How the consensus figure is arrived at? MYR484.6 m. Looks like there are someone out there even more aggresive.

Moolah said...

The market does need to take a good look at itself.

What does the market want?

Ultimately, the market wants to know which stock will go up.

That's all the matters.

And what does this got to do with research reports? Everything babe!

Mun Wai said...

Agree. This is undeniable.
Afterall, the ultimate goal is to seek higher yields / better returns compared to other plain, boring unseductive alternatives.

So Moo, for top notch investment research, go for the house led by a credible, top notch Head of Research, yes Moo? yes?