SJ Securities rates Farm’s Best a ‘buy’
RESEARCH house SJ Securities Sdn Bhd has recommended that investors buy shares of poultry firm Farm’s Best Bhd on an expected rise in profits and dividends.
Farm’s Best has benefited from the avian flu scare because Malaysia has been spared the virus, which has struck other countries in the region.
That's the opening line from this Business Times write-up on Farm Best, a stock which is simply ze best of them best stocks in the world. (3 months ago, this stock was at a low of 90 sen. Now it is above 3.50! Is this terror or what?)
Aiseh! In case you were on a blue moon holiday and have not been following the local share market (and Citeh whacked MU!!), this stock has been moving up bom-bom sound!
Well, is the stock going up because of Farm Best earnings or is it because of ze Chiak theory?
Err... i dunno lah... ok?
Me just a mumbler and a bumbler mah! :D
But.. let's just take a look at what SJ Securities is saying here:
“Including the potential discount of RM8 million and increase in sales due to the major compliance problem (faced by Farm’s Best’s competitors), the prospective earnings of Farm’s Best are expected to be stronger in fiscal year 2006 estimated at RM48 million,” SJ Securities said.
Based on its enlarged paid-up capital of RM119.1 million, Farm’s Best is expected to post earnings per share of 40.3 sen for fiscal year 2006.
Hmmm..... mmmm....
Now question for me is SJ Securities projections reasonable or issit overly optmistic?
Quarterly rpt on consolidated results for the financial period ended 30/9/2005
That was Farm Best last reported earnings...
So for fy 2005 earnings, Farm Best managed a net profit of 18 million for the 3 quarters of the current fiscal year. Which works out to an average of 6 million per quarter. And based on an annualised basis, Farm Best could be earning around 24 million this year.
Now.. SJ Securites is estimating/projecting or ASS-U-Ming a net earnings of .... 48 million for Farm Best next fiscal year!
Ahem...
So how?
What do you think of SJ Securites report?
Oh... Malaysia spared from AVIAN FLU virus meh?
* wei... i dunno hor... what and how Farm Best will perform in the market hor... so do not ASS-U-ME!! *
I don't expect FARMBES to archieve profit of RM48m in 2006 but definitely RM24m in 2005 is archievable. At EPS of 43 cents, I think its PE of 8x at RM3.6 still sounds reasonable.
ReplyDeleteAnyway, I still haven't discover any sign of distributions at the moment. I really have no idea where the top is.
CB,
ReplyDeleteDo note the dilution effects due to the up-coming rights issue and bonus issue. Total number of shares of FB's corporate exercise would be around 119 million shares.
ps.
My knowledge on Farm Best is limited... and i blogged what i blog because i think SJ Securities projection of Farm Bests earnings is rather optmistic... cos they are basically suggesting that Farm Best earnings will double-up the next fiscal year.
Regarding chicken stocks.. these are two issues for me.
1. The chicken business is a lousy business. Without the government aiding these chicken buggers with the recent price ceilings (which resulted in better profits and better margins).. most chicken buggers were losing so much money that these chicken buggers would probably have had to cross the road... (err.. chap lap lar) :P
Question.. Since the one and main catalyst in the sudden change of good fortune is the governments intervention in the ceiling prices, isn't the NEXT logical issue to consider is how long will it last? (me? i dunno hor.. but .. i would surely keep this issue into consideration and not discounting it) ie. What if the govt decides that inflation is creeping way too high and to lower INFLATIONARY costs, would the govt revert back to a much lower ceiling price for chicken and eggs?
2. Has much change? Most of the chicken stocks have a rather weak business fundamental with huge borrowings as a constant factor.
how?
:D
Let's think from the other way. Look at their cashflow statement, the company is desperate for cash. So they need to raise money from public or else they may go under sooner or later. For sure they want to raise money as much as possible. How? Rocketing the stock price loh...
ReplyDeleteI didn't go into detail of the fundamental of poultry business because it's not my major concern. Anyway, thanks for your info.
CB,
ReplyDeleteYes, the last i saw long ago.. FB needs cash... but that's beside the point, isn't it?
It's either u are in it for ze CHIAK theory (hence.. i think u shud know wat to do urself, isn't it?)... or... u are in it for the so-called investing thingy..
mix and match? ie .. a little of rock and a little bit of roll...
well.. more often than not ... u get mix results...
:D
Sorry I can't get u. What is CHIAK theory?
ReplyDeleteLOL!!!
ReplyDeleteSoooooooooo sorry!!!
I was taught recently that chiak means eat... in hokien. :D
in stock market.. same meaning.. as ... err... cooked.... :P
ps..
ReplyDeleteoh to be more specific...
in the heat of the trading action.. keke.. there's an expression 'chiak' them sellers in the sell queue... meaning u whallop/eat all or a huge chunk of them sellers in the sell queue! :P:P
hi nm,
ReplyDeleteIf you read the tape of this meteoric rise of farm best price, you will notice the same pattern like tanamas,lipo, etc syndicated play. Remember the rise and fall of Liihen. More of less the same modus opeerandi. Good prospect, low PE, expansion. At the end of the day, when you are less expected, kaboom.
But, i agree with you, the top is very hard to predict. For me, i will stay away. Just like in ponzi scheme , u muse be the early bird in order to make money. Call me risk averse INVESTOR, pun intended.
hhc,
ReplyDeleteWassup dude?
How's everything?
Err... err... u see... this FB.. i really dunno what's gonna happen hor...
meaning.. i dunno if it's gonna go up or down....
and.....
me only mumbled on this stock because i find it strange that SJ Securities assign such bullish outlook (via sooo optimistic earnings outlook for FB's fy 2006...)
That's all lor...
ps...
how? made tons of moola huh dis round? :D
Hi moola,
ReplyDeleteNow I understand what you mean. :)
Hi HHC1977,
I agree with you that it may collapse when you are less expected. That's why I usually buy very little everytime and I only average up.
CB,
ReplyDeleteI think it kinda helps if we use the right perspective when we are IN the stock market...
for example.. ur entry in FB.. is probably based on your trading strategy... now since you are in it because of this reason.. i think perhaps it is best not to mix fundamental reasoning into whether you should stay or you should leave your trading position..
wat say u?
may I say something?
ReplyDeleteMy experience: If you are speculating (punting)a stock base on chart/volume/other technical skills,then you should exit based on the same. Post analysis of the fundamental to justify whether to hold on any gain/loss any longer or to turn it into long term holding(BUY AND HOPE again) is the most disastrous thing to do.
hi nm,
ReplyDeletev bz with my new role in new department. But i still play BSKL, it is in my blood.
I agree with nm, dont try to justify your purchase based on speculation/TA with Fundamental. This will only cloud your decision making process. There is nothing to be ashamed in buying syndicated shares. The greater fools theory holds true everywhere.
NO really making tons of money. Like peg, i considered myself more like swing player rather than scalper. NO time to monitor and i think i m not good at that.
After so many years, i still find that a stable and profitable job with high increment is much rewarding than investing in BSKL. This is my 2 sen only.
Doc,
ReplyDeleteI agree with what you are saying!
:D
hhc,
ReplyDeletewaaa.... looks like u have found what u are really good at... and if that's the case... me think u shud stick to it, eh?
Kinda... be the best u can be mah..
:)
Guys,
ReplyDeleteI totally agree with your idea that we should stick to either technical analysis or fundamental analysis.
I seldom invest based on fundamental. But I still pay attention to the change of fundamental because I can know how market react to the news. Good news is just like a selling point, it could attract other investors to help to push up the price, which is good for the early bird.
IMHO, All technical analysis will lose its function for this kind of counter. I think it is more toward a psychology game. Like playing chess, you need to know what your opponent wanna to do so based on his movement so that you can find a way to counter attack him.
p/s: I'm one of the early bird :p
CB,
ReplyDeleteDo read Liam's reply to me on that CANslim blog entry... cos... i really agree with him that whether one is a trader or an investor, the most important thingy we need is some simple good commonsense thinking!!!!
Don't u agree?
9:55 PM