That Silver Birdie .. Part V

Managed to get hold of AmResearch write-up on Silver Bird.

Here are some of the points mentioned..

• Results analysis
  Below expectations. Silver Bird Group Bhd’s (“Silver Bird”) net profit for 1QFY06 of RM1.943m equalled only 6.5% of our FY06 net profit forecast of RM19.7m. We under-estimated the extent of losses from its operations in Singapore, which ballooned from a loss off RM1.76m in 4QFY05 to RM2.88m in 1QFY06.
  Only 6.5% of full-year net profit forecast? Management had previously indicated that it was confident of breaking even before the end of FY06. Taking this into consideration, we expected losses in the first half of the FY06 and a profit in the second half of the year. Based on the reported loss from its Singapore operations in 1QFY06, however, we are now increasing the expected losses from its Singapore operations from just over RM2m for the year to about RM8.6m. This will revise our earnings forecast for FY06 by nearly 20% to RM15.8m.
  Borrowings reduced significantly, and still a priority. Management was keen to point out that short-term borrowings had declined by a full RM10m from RM85m in the previous quarter. Silver Bird has been working hard to clean up its balance sheet in the light of an increasing interest rate environment which has increased the cost of its capital. In addition, both trade receivables and trade payables both declined significantly in 1QFY06 - implying a greater efficiency in collection of debts on the one hand and a better control on costs on the other, according to Management.
  Cashflow turns positive. The net impact of the above is a turnaround from a net debt position of RM9.1m at the end of 4QFY05 and a net cash position of RM5.0m at the end of 1QFY06. This swing of RM14m is impressive. We believe that this stands Silver Bird in good stead as it actively explores ways to reduce gearing as well as to promote efficiency, all whilst growing its profitability in Malaysia and gaining scale in Singa-pore.
  With strong prospects of a turaround of sorts in as early as this 2QFY06, we are recommending no change in our HOLD call for now, although its share price may fall sharply on the back of the lower than expected 1QFY06 earnings.

Hmmm... AmResearch is expecting the losses from its Singapore operations from just over RM2m for the year to about RM8.6m.

And AmResearch concludes that ..

• Valuation and Recommendation
  Given the likely profit contribution from its Singapore venture in FY07, bullish investors may not currently believe that SBG should be valued at less than 8.5x FY06 PER. This would imply a price target of RM0.62 based on our revised EPS of 73 sen in FY06. This excludes the dilutive effect of the 105m warrants still in the market though, as its current trading price of RM0.14 and conversion price of RM0.80 makes it unlikely to see many warrants being converted to Silver Bird shares in the next two to three years at the least.
  We reiterate our caution, though that there is a significant possibility of sustained elling pressure in the aftermath – should observers fail to absorb the turnaround in its overseas operations that Management is confident of seeing in the last quarter of FY06, at the latest.

Hmm... how?

Oh... what I find so strange is that after their over whelming bullish write-up on Aug 2005, OSK did not have a follow-up article on Silver Bird.

I really wonder why... perhaps that little birdie just flew up, up and awayyyyyyy....

:p