Credit Suisse has a target price of rm7.30 on Gamuda!

Saw this article, US-based fund buys 4 million Gamuda shares, on Star Business.

The last set of comments was rather interesting.

• The latest recommendation was from JP Morgan, with an “underweight” call and target price of RM3.30 yesterday. However, Credit Suisse, in its recommendation issued last Thursday, had an “outperform” call on Gamuda with a target price of RM7.30.

Always love such wild differential in target prices from brokerage houses.

Here we have JP Morgan with a target price of rm3.30. Too pessimistic?

And then we have Credit Suisse with a target price of rm7.30. Grossly optimistic??

But... but... but... wait a minute it's Credit Suisse!

And CS is blogger Dali's favourite!

Here are two postings from Dali on Gamuda and CS:

1. Bull, Bullocks & Their Derivatives

• Let me give you a real definition of "accidental result": placing a humungous chunk of Gamuda to supposedly smart foreign investing professionals, just because you have them around your little fingers, and then doing a Britney "oops, I did it again" - and when the share tanks 20% a couple of days later, that's a fucking accidental result

2. Dissecting Gamuda's Demise

• Credit Suisse team ill-advised Lin on the placements. CS team mis-read the market's probable reaction. The deal was structured poorly. The PR machinery on the 18 month lock up was useless in light of the size of the placement and the size of the remaining shares. A better way would have been to break up the deal into 3 tranches. Announce that 1/3 is placed out now, another 1/3 12 months later and the remainder for lock up.
  
  Even if Lin was the one wanting to sell the stake, CS should have advised otherwise. There is really no valid reason to dump so much Gamuda, after all, Lin reputedly already has a couple of hundred million ringgit in the bank, and need not really sell down any more. Estate planning - you can very well give Gamuda shares as inheritance... I thought Gamuda shares were excellent medium term and long term investments??!! At least that's what Lin said during his last roadshow a couple of months back. You mean, Gamuda shares are not good enough to leave to your kids?
  
  Maybe there was something else which caused Lin to sell. Maybe something happened with regards to "contracts disbursements and allocations" which pissed him off. Maybe he wanted to dump the shares to show the other minority but substantial shareholders what he thought of the situation. If that was his point, it was very well made and had the desired effect.
  
  CS team was overly aggressive to think they can do such a placement with a stock that has such a high free float. CS team probably couldn't care less as they made their cut and placement fees. Clients should punish CS by not dealing with them for a long period. How to take future placements from CS as you can never be sure what kind of shallow thought-process they went through. A classic case of slash-n-burn'em team. It would have been worse if they were not the slash-n-burn'em type cause that would mean they are just incompetent.

And now Credit Suisse comes up with this rm7.30 price target for Gamuda!

How my dearest MooMooCow?