Crest Builder's Home Run?

Just as I updated my blog posting on Crest Builder ( Crest Builder - Fulfilling What Prophesies?? ), I realised that Crest Builder reported its earnings yesterday.

As mentioned in Crest Builder Again, Crest Builder had only made 9.322 million for its first 2 quarters of fy 2006. And for OSK to forecast its fy 2006 earnings to be at rm32.9 million, I find it totally astounding!

This was Crest Builder earnings: Quarterly rpt on consolidated results for the financial period ended 30/9/2006

Crest Builder announced its Q3 earnings was rm7.225 which was certainly much more than CB's Q2 net earnings of rm3.695 million.

But...

As good as its earnings was, it was never gonna be enough. Not when one projects such an astronomical set of earnings.

Hence, the OSK writer was forced to write in the following manner.

• Astounding! CB’s 9M06 turnover and net profit grew significantly by 25.4% and 71.2% respectively (Fig. 1). Even after adjusting for the cessation of goodwill amortisation in accordance with FRS 3, CB would still register YTD net profit growth of 38.4%. Despite the much stronger 3Q06, annualised net profit came in at RM22m, still a far cry from our initial projection of RM32.9m. It managed to however, beat the market consensus by at least 10%.

A far cry from their projection of rm32.9 million!! And that projection is looking might silly ain't it?

• Fine-tuning required. Despite the impressive set of results, CB is still lagging behind our initial projections. The Group only has 1Q left to register a further RM16.4m in net profit to hit our forecast! Much of this, as we foretold earlier, was the extremely slower work progress recognition during the 1H06. Hence, we are gladly fine-tuning our FY06 turnover and net profit projections from RM336m and RM32.9m to RM310.4m and RM26.8m respectively

LOL!!! So they forced themselves to 'fine-tune' their projections DOWN TO rm26.8 million.

Fine-tune.

What a nice set of words!!

And consider this. Current Crest Builder net profit is only rm16.547 million. So despite knowing that the group has only one reporting quarter left, OSK still CHOSE to SET A VERY OPTMISTIC projection of rm26.8 million!

Which means, they are saying Crest Builder will report at least rm10.253 million in earnings for its Q4 quarter.

Mighty optimistic again considering Crest Builder only earned rm7.225 for its Q3.

Now take a look at this.

• Reiterating BUY with a refined 12-month target price of RM1.70. Based on the Group’s current share price of RM1.03 and forward fully diluted FY06 of 18.7sen and FY07 EPS of 30.5sen, the CB is currently trading at a forward PER of 5.5x and 3.4x in FY06 and FY07 respectively, a significant discount of 21.3% and 51.8% to its average peers’ PE of 7.0x. This is unjustifiable given CB’s strong and solid earnings prospects.

Guess what, a refined 12-month target price of RM1.70.

LOL!!!!

Refined!

Another choice word!

What happened to their TARGET PRICE of rm1.84 (see Crest Builder Again) set just on the 14 Nov 2006?

This was a HOME RUN stock, isn't it?!!

A home run stock which had its TP reduced from rm1.84 to 1.70?!!

A home run stock which is seeing a lot of SELLING (see Crest Builder - Fulfilling What Prophesies?? ) ??!!

A home run stock was promoted at 1.18, a day after the stock gained 13.5% the previous day!?

A home run stock which opened the day at 1.03, down 15 sen, after it's rosy write-up on the 14th Nov!?

How can?