everything: Featured Report: OSK Research On Axiata

The following article on the Edge Financial Daily, OSK upgrades Axiata to buy caught my attention.

OSK Research yesterday upgraded its recommendation for Axiata Group Bhd to buy from trading buy with a higher price target of RM3.40 on expectations of better earnings from its two main subsidiaries Celcom (M) Bhd and PT Excelcomindo Pratama (XL).

“We expect XL to report a headline net profit in 2Q09 on the recovery in mobile spending and a gain in the rupiah of some 12% year-to-date.

“Our recommendation on the stock is upgraded to a buy from trading buy on growing conviction on the earnings delivery of its overseas mobile assets and our view of diminishing medium-term concerns over its balance sheet,” OSK Research said in a note....

I was aroused. LOL! I was excited yo!

I wondered. Would OSK be consistent in their recommendation?

Or perhaps would I be seeing their incredible flip-flop on price targets as seen in recent postings like Featured Report: OSK Research On Astro All Asia or Featured Report: OSK on Pelikan Holdings or What Hope For Malaysian Investing Public When Research House Makes Such Calls?

Let's track back on OSK recommendation on Axiata since the start of the year....

I think I will add in the last report made in 2008. At least we know how their recommendation ended last year. :D

And just for the record, on 28th April 2008, OSK initial coverage on Axiata (or TM International - old name) had Axiata as a buy with a TP of 9.20.

OSK ended 2008 with a Neutral call on Axiata. Price target was 4.20.

8th January 2009.

Feb 6th 2009. Axiata falls to 3.18. OSK held firm despite market chatter on possible writedown on Idea for Axiata. :D (consistent so far yo! )

19th Feb 2009. YIKES!!!!!!!!!!!!!

Recommendation is stated as NEUTRAL and target price remained at 4.20 but they threw in a screw or curve ball!!!

If you look at the second arrow above this NAUGHTY LINE stood out like sore thumb! Quote "Our forecast and target price are under review pending the release of its results on Feb 26. TMI remains a long-term BUY."

Macam mana ni?

The recommendation is NEUTRAL and the last I knew, neutral is neutral is neutral. A neutral does not equate a long term buy!

Perhaps I am from another planet!!

And then I was also confused. (as usual. :p2 )

On 6th Feb 2009, Axiata was 3.18 and the so-called Neutral price was 4.20. Well that's an upside reward of 1.02 or 32% based on a reference price of 3.18. 32% precent woh! How come the recommendation was NEUTRAL? ( macam mana ni? )

You know that at the end of every OSK report, they have this explanation of their recommendation calls and this is the snap shot of it....

So as per their report: "Neutral: Share price may fall within the range of +/- 10% over the next 12 months"

hmmm....... :p2

Feb 26th 2209. Axiata announced its quarterly earnings. Its losses was more than 515 million!

And with the rights issue, OSK correctly reduced the target price.

However as usual I was baffled. Why? I was baffled with their insistent on having Axiata at NEUTRAL! (Yeah, OSK is the only one in town who can cut target price by some 28% and yet can still maintain their recommendation. oO )

RECOMMENDATION

Maintain NEUTRAL. Target price cut to RM3.00. We slash our FY09/10 forecasts by 14-28%, mainly to reflect weaker EBITDA margins on average of 37% versus 38.5% previously due to the higher operating cost environment for most of its overseas assets. Our revised projections see TMI posting a slight earnings contraction of 4% for FY09 before recovering to 19% in FY10, driven in the main by lower interest charges following the de-leveraging of its balance sheet.

We believe the market may have already priced in the risk to certain extent of a dilutive recapitalization exercise, with TMI’s share price hitting a record low of RM3.02 earlier this month. That the pricing of the rights shares has yet been fixed could potentially result in further dilution should its share price weaken further. As such, we now attached a 20% discount to our SOP target of RM3.76 to derive our new target price of RM3.00.

We would turn buyers of the stock should the share price dip below RM2.70.

March 24th, Axiata fixed the rights issue at 1.12. It was a rights to buy five new shares for every four shares held. (hope my england is a ok. :p2 )

March 25th. Price is now 2.61. Their call? Take profit. TP downgraded to 2.50!

I kid you NOT!

What kind of recommendation is take profit????? ( Macam mana ni? Axiata had been plunging since listing... got what profit to take????? )

Wait it's now only March 2009. Less than one year ago, OSK had Axiata at a buy with a TP of 9.20!

Lucky I got that report to share.

March 2009... Global markets were bouncing and our market too was 'panas'.

And guess what was OSK next recommendation?

Upgrade to NEUTRAL with TP remaining at 2.50! LOL! I kid you not! Have a look yo!

LOL!

One month later.... came another shocker!!!!!!!!!!!!

28th April 2009. OSK downgrades Axiata once again! LOL!

Axiata then traded around 2.10 and OSK gave it a TP of 1.73. oO

And once again.... what's the meaning of TAKE PROFIT? (apa ni?)

Where's my chart of Axiata?

The above chart shows the performance of AXATA from listing till 30th April 2009. It would be pretty hard to take profit, yes? ( unless of course one is a super duper trader. Oh.. do remember to ask iCap on this one during the upcoming AGM. :D )

And oh yeah, do check this past posting on 25th March 2009: What A Trading Day For TMI. Axiata or TMI had a brutal day that fine March day.

May 20th, OSK then upgrade Axiata to a trading buy to 2.70!

... upgrade our recommendation to a TRADING BUY from TAKE PROFIT as our previous concerns over the overhang arising from the listing of its rights shares appear to be unjustified. Our sum-of-the-parts target price is now raised to RM2.70 (from RM1.73), factoring in the independent contribution from Idea and after rolling over our valuation on Celcom to FY10.

June 18th. Trading buy maintained at 2.70.

July 8th 2009. Trading Buy maintained at 2.70.

And as most are aware, Axiata had been rather hot lately. Yesterday, OSK made another update on Aziata. And guess what? They raised their TP for Axiata to 3.40.

So how now my dearest?

Axiata TP is now 3.40 woh!

You want or not, cheh?