Thursday, May 19, 2011

RHB Now Downgrades JCY Again - Fair Value 46 sen

Err.. previously on Bursa stock market.

On 1 March 2011, RHB downgraded JCY Fair Value to just 22 sen only.

This was the snapshot of their report then.

On 31 March, RHB had upgraded JCY to a market perform! No, they did not upgrade JCY in a report on JCY but instead it upgraded JCY on a market outlook report. On 31 March report, titled 'Market Outlook & Strategy 2Q2011 : Climbing The Wall Of Worries'.

Page 55 of the report:

  • We believe JCY could benefi t from the industry consolidation as this could reduce pricing pressures. In addition, JCY could potentially secure higher volume loading for new HDD components from the enlarged WD. Therefore, we are raising our FY11-13 net profi t forecast by 241.5%, 224.5% and 167.8% respectively to reflect: 1) higher margin assumptions as we believe the average selling price would remain stable; and 2) higher revenue assumptions on the back of improving corporate and consumer spending. Furthermore, we have rolled forward our valuation base year to CY11 (from FY11). Correspondingly, we have raised our fair value to RM0.81/ share based on 10x CY11 EPS and we, therefore, upgrade our call on the stock to Market Perform.

So what do we have?

On 1 March 2011, JCY was at 66 sen. It was downgraded to a mere 22 sen.

On 31st March 2011, JCY was upgraded from 22 sen to a 81 sen!

It's now 19 May 2011. as posted yesterday, JCY earnings was way below estimates! and today, RHB have this to say on JCY.

Fair value is now 46 sen!!!!


I am in a daze. :P


Perhaps they shouldn't make that 81 sen upgrade call on 31 March 2011. Because at this moment of time, per JCY's current earnings, RHB's initial estimates would had been spot on!!!

Anyway, do note that RHB earnings estimate for JCY is 86.2 million (eps of 4 sen). In their initial downgrade of JCY to 22 sen report, RHB earnings estimate was 44.9 million. (eps of 2.2 sen)

And how is JCY doing? Well JCY said it made a net profit of 12.458 million for its 2nd quarter, which means that current first half earnings from JCY is only a 'paltry' 19.970 million (eps of 0.98 sen only!!)


46 sen?

Do you think that even at 46 sen, it's too optmistic?


K C said...

you really have a lot of fun poking at analysts reports. How come so many of these supposedly highly qualified and respected gurus in investment (or are they?) so careless and inconsistent in their published reports? Beats me.

Moolah said...

K C: err... :P

Honestly I thought that their initial downgrade call was rather gutsy, very gutsy... err... steelballs... but... I thought there was some justifications.

But then... that 31st March market strategy was a big no-no. The reasonings were so unlike them. (ahem!)

Well if they had held on to their initial downgrade call.. RHb would be looking like real champions today!

@amirhghazali said...

I value them at 31 sen... Does that mean I'm qualified to work for rhb..? he..he..