That Silver Birdie.. Part IV

I just had a look at CIMB's research article posted on Bursa eResearch website: Silver Bird Group 1Q below - No icing on the cake from Singapore .

CIMB recommendation is a SELL

• Reiterate SELL. Our earnings downgrade reduces our target price from RM0.53 to RM0.48 based on an unchanged forward P/E of 8x. We reiterate our SELL recommendation in view of the downside risks to the share price in the form of: 1) bigger losses in Singapore, 2) deterioration of bakery margins, and 3) issuance of another EPS-dilutive instrument.
• Recommendation
  It appears that SBG is being hit on both the bakery and prepaid distribution fronts.
  The bakery margin has dropped substantially from just six months before due to pricier raw materials and QAF’s competitive edge on both sides of the causeway. We understand that QAF acquired Bonjour from Boustead Singapore in 2001 in a deal reportedly worth S$15m.
  At home, we doubt the prepaid distribution business can provide much of a buffer from the soft bakery showing as the former’s performance is far from impressive.
  Still, we believe SBG is unlikely to drop the mobile reload distribution business as it is popular among small grocers who do not have to put much cash upfront since they buy only a small number of cards for resale. The prepaid cards are distributed nationwide together with bakery products.
  We have cut our FY06 net profit by 23% to RM14.4m after factoring in RM4m additional losses from the Singapore operations. As such, FY06 net profit is expected to dip by 26% yoy. However, the drop in FD EPS is expected to be wider at 50% as the share base was swelled by the issuance of 105.3m warrants in Sep 05. We have also lowered our FY06 DPS assumption from 2 sen to 1 sen.
  Due to the earnings downgrade, we reduce our target price from RM0.53 to RM0.48 based on an unchanged forward P/E of 8x. We reiterate SELL recommendation. Consensus estimates are likely to be lowered too in light of these results.

hmmm... CIMB has lowered their forecast earnings for SBG to just rm14.4million.

How brown cow?

Think CIMB's Sell recommendation is without any justification?