Thursday, June 02, 2011

TA Research's Commentary On AMedia's Private Placement

On Bursa CBRS website: TA Research has a report on ASIA MEDIA GROUP BERHAD. (click on name for the pdf file)

It has a NICE Target Price of 45 sen for Asia Media.



Well it's rather strange and confusing - more so if you read the fine points.

TA Research mentions the dilutions effects.



But look at the "Theoretical New Target Price"

Taking into account the full placement of 35%, our target price would be adjusted downwards to RM0.34/share from RM0.45/share currently.

Now adjusting the price lower is correct. There's 35% new shares. The dilution from the new shares would caused the EPS to be lower, hence a lower target price.

But, but, buttttttttttttt .............................. here comes the screwball.



Valuation and Recommendation
We maintain our Buy recommendation on Asia Media Group with an unchanged target price of RM0.45/share at this juncture.

Duh!

Macam mana ni?

They, TA Research, recognise and acknowledge the dilution impact on the eps caused by the private placement. They ownself said they the "Theoretical New Target Price" would be adjusted lower to 34 sen.... but yet somehow.... without giving any solid reasoning at all, they, TA Research, just said that their recommendation is unchanged with an unchanged target price of 45 sen!!!!!!!

What? Huh? What?

3 comments:

David Koay said...

Effects of brain drain...LOL!

David Ng said...

From Amedia recent annual report, TA Small Cap Fund has some stakes inside. Just about 2 million shares...

Moolah said...

David Ng: Thanks for that info.

No wonder!!! Vested interest!

I guess this explains the insantity of the stock recommendation!

This is probably the first time ever for me! Despite the known and acknowledged theoretical new LOWER price, the research house bizaarrely stuck to it's OLD recommendation with an unchanged stock target price.

For the stock to go from 34 sen to 45 sen... that's a stock appreciation of 35%!!

The last I know... it's a no brainer that the stock such be downgraded!