Today I posted a bunch of reports on Maybank, KLK and Maxis here. I am a bit snowed under at work so I haven’t had the chance to look through them properly, but here are some more questions to ask yourself when you read these reports:
1. Are they telling you something which isn’t already in the news, and hence priced in already?
2. If so, why is does the analyst think that prices should be somewhere else?
3. What assumptions are being made?
August 24, 2006 at 2:09 am |
Dirty dog,
i’m sorry for posting here when my response is to your “rumuour mill” posting. Just that i cant seem to leave a comment on that page as when i enter, it keeps telling me that i have to be logged in to leave a comment (unlike the usual where there is a box at the bottom of the page to leave comment, and i am already logged in).
I would like to know what your follow up thoughts are regarding rumour #4 iro contracts awarded. How do you estimate the impact of the contract? For example, oilcorp recently got a rm40 million as below -
PETALING JAYA: OilFab Sdn Bhd, a subsidiary of Oilcorp Bhd, has been awarded a RM40mil project by Newfield Peninsular Malaysia Inc for the provision of engineering, procurement, construction and commissioning of jackets and topsides for Chermingat-A Platform.
The company said in a statement yesterday the project was expected to commence by the end of this month at its Pulau Indah fabrication yard for completion in April.
The Chermingat-A platform is operated by Newfield and co-owned by Petronas Carigali Sdn Bhd.
OilFab said the project was expected to contribute positively to its earnings for financial years ending Dec 31, 2006 and 2007.
Seems like the market hardly reacted to such the news and i believe this is not the first time i have come across this kind of situation. Oilcorp’s turnover is around ,so a rm40m contract should (in theory) have an effect, if not after the release, then before. But there was no run up of any kind (or just a 3sen run up). Can you pls share your thoughts on this issue. Thanks in advance.
August 24, 2006 at 2:32 pm |
ccdev – The point of the post is to encourage one to dig deeper and not just assume that a contract will lead automatically to earnings growth. Many pieces of the puzzle need to come into place. The company must be able to operate efficiently and have the necesary resources to do so. It must also have a good paymaster. Oilcorp’s balance sheet is horrendous and its operating cashflow has only been in the black 1 out of the last 5 years. Also I would want to know more about the contract. Like what its pay structure is etc.
And remember to take a look at the share price. Always look at the charts first before going in. Oilcorp is also extremely volatile and heavily manipulated if you see what has been happening to that share in the last four months. It has already been ramped up 100% on 2 occasions, no doubt leaving many hanging to dry at the top, so I doubt if the sharks will want to mess with this one as much for a while, but it has nonetheless been on a rising trend since June of last year.