Yes, RHB DID Change Its Fair Value On JCY!

From the posting: QC And The Research Reports

• limko said...
  It is not an isolated case in OSK's report on Axiata or MMC, it is the same with RHB's report on JCY which came down from around 1.8 to 0.8 and then 0.22 back to 0.8 recently, all in matter of months if not weeks.

It was a very interesting comment because I was not aware that RHB had made such a drastic adjustment in its fair value call for JCY.

Why?

Because there wasn't a new report released on JCY! Not that I was aware of.

As far as I was aware of, RHB's downgrade of JCY to 22 sen was under the report "JCY International Berhad : Back To Black, But Disappointing Again". It was published on 28 Feb 2011. This was highlighted in the posting http://whereiszemoola.blogspot.com/2011/03/is-rhbs-downgrade-of-jcy-and-fair-value.html

Now get this.

Thanks to limko, I now realised that RHB changed its views on JCY.

And no, they did not make a new report.

Now thanks to limko, I was told to look for 5th April 2011. Yes, on 5th April, just 5 weeks after downgrading JCY to 28 sen, RHB revised its call on JCY under the report "Semiconductor: Slight Drop MoM In Feb, But Stronger YoY Growth'.

I kid you not!

Yes, surely RHB could have made a whole new report on JCY itself, right? It's a massive upgrade, yes? Why mention it in a semiconductor sector report? Is JCY even a semicond stock?

Glee!

This is seriously not right!

Here's the screen shot.

And their reasoning?

• .... JCY: Beneficiary of the industry’s consolidation. We believe JCY could benefit from the industry consolidation as this could reduce pricing pressures. In addition, JCY could potentially secure higher volume loading for new HDD components from the enlarged WD. Therefore, we have raised our FY11-13 net profit forecast by 241.5%, 224.5% and 167.8% respectively to reflect: 1) higher margin assumptions as we believe the average selling price would remain stable; and 2) higher revenue assumptions on the back of improving corporate and consumer spending. Furthermore, we have rolled forward our valuation to base year to CY11 (from FY11). Correspondingly, we have raised our fair value to RM0.81/share based on 10x CY11 EPS. We upgraded JCY to Market Perform in our strategy report dated 31 March (from underperform previously).

huh? They raised their net proft forecast for JCY by 241.5%, 224.5% and 167.8%????

WOW!

And on 31 March, RHB had upgraded JCY to a market perform????

I then had to dig up that 31 March report, titled 'Market Outlook & Strategy 2Q2011 : Climbing The Wall Of Worries'.

Page 55 of the report:

• We believe JCY could benefi t from the industry consolidation as this could reduce pricing pressures. In addition, JCY could potentially secure higher volume loading for new HDD components from the enlarged WD. Therefore, we are raising our FY11-13 net profi t forecast by 241.5%, 224.5% and 167.8% respectively to reflect: 1) higher margin assumptions as we believe the average selling price would remain stable; and 2) higher revenue assumptions on the back of improving corporate and consumer spending. Furthermore, we have rolled forward our valuation base year to CY11 (from FY11). Correspondingly, we have raised our fair value to RM0.81/ share based on 10x CY11 EPS and we, therefore, upgrade our call on the stock to Market Perform.

Seriously?

With such a massive earnings forecast upgrade, shouldn't RHB released an individual report on JCY?

I might be wrong but by mentioning JCY and revising the forecasts in other reports, it's rather snakey! Yes, it feels snakey too me! (Hey that's my flawed opinion! )

Just incredible!

***** I have to add this: I do not know and I do not care how JCY the stock will trade. I am just utterly flabbergasted on how RHB could make such a drastic change in opinion on JCY fair value.