Would You Buy Parkson Holdings?

It's incredible really.

How them local so-called experts had been raising their targets left, right and center. And sometimes we really wonder if the size of the upgrade is really worth the justification given the time frame and reasoning mentioned.

But then, some would point out that it's quite clear that the bulls are in charge and they dearly wants them stocks to move higher to the North Pole.

LOL!

And yeah, some cows can do pole dancing too!

On Business Times, there was an article which tried to republish what OSK said in its consumer sector report, Consumer product, retail stocks shine

• OSK says retail sales will recover gradually towards the year-end, boosted by the festive seasons and mega sales campaign
  
  CONSUMER products and retail stocks like Parkson Holdings Bhd, Hai-O Enterprise Bhd and AEON Bhd were traded higher yesterday, after OSK said retail sales will recover gradually towards year-end.
  
  "While we expect another soft quarter in the second quarter, it would be better than we anticipated earlier, given the rally in the equity market and the more positive overseas economic data in June.
  
  "We believe retail sales will recover gradually towards the year-end, boosted by the festive seasons and mega sales campaign," said OSK Research in a report yesterday.
  
  Four out of the 10 top gainers were made up of consumer products or retail related stocks, including Nestle, which added 5 per cent or RM1.50; Parkson, which rose 4.4 per cent or 24 sen; Dutch Lady, which added 1.8 per cent or 20 sen; and British American Tobacco, which climbed 1.5 per cent or by 70 sen.
  
  Shares of Padini, NTPM, Hai-O and AEON, which is under OSK's coverage, also went up by between 0.4 and 3.3 per cent yesterday, which is in line with the benchmark index FTSE Bursa Malaysia KLCI that rose 0.7 per cent.
  
  OSK placed a "buy" call on Parkson and Padini, with a target price of RM6.60 and RM2.94 respectively, while remains "neutral" on stocks like Hai-O, AEON and NTPM.
  The research house also expects retail sales recovery to be more apparent in 2010, driven by an anticipated stronger gross domestic product data in 2010, with anticipated lower unemployment rate due to improved business sentiment, rebound of the equity market and positive news flow from overseas, among others.
  
  "Car sales had shown consistent sales growth of 9 per cent over the last three months, while mortgage home loan approvals, which are a leading indicator of home sales, had gone up significantly from March to May this year.
  
  "Although property and car sales are not directly related to retail sales, their rebound nonetheless suggests that consumers have started buying big ticket items, thus boosting demand for consumables which are much cheaper," it said.
  
  It also added that significant margins erosions for retailers will be less likely in the second half, and that the A H1N1 pandemic would have negligible impact on the retail industry.

Hmm... the justification or the reasoning was that "retail sales will recover gradually towards the year-end, boosted by the festive seasons and mega sales campaign."

Now that is a solid justification..... but.... but... butt.... my dearest, do look at the key word, which is recover gradually.

No promises but there is a likelyhood that it could recover gradually.

And we aren't even talking about massive growth. Just the plain 'gradual recovery'.

So now think outside for a moment. If one is NOT in the sector, do we want to buy in?

And if we do, don't we want buy to buy them stock at a cheaper price (to mitigate the risks) and not chase the stock as if tomorrow never comes?

No worries they say, buy higher sell higher yo! Buy the momentum!

Yeah, it could work but what if this simple reasoning falls short? Would you then turn into a long term investor due to the wrong reasoning?

Let's take a look at Parkson Holdings. I chose this one simply because there was quite a lot of postings on this stock already. For example, the following posting was made on Monday evening. Life Is Grand For Parkson Holdings

Now as I had said Business Times tried to republish or reproduce what OSK had said. Sometimes such republications is not accurate. Take a look at the red bold statement.

• OSK placed a "buy" call on Parkson and Padini, with a target price of RM6.60

Ah.. I remember jitseng asking for fair reporting. :D

Now the statement itself is accurate..... but... but... but..... butttt..... it's not FAIR reporting.

OSK had only started coverage on Parkson on 4th June 2009.

Parkson was at 4.84 and OSK calls a BUY with a target of 5.50.

Fair enough.

Yesterday, OSK published its 'consumer sector' report. It had to included Parkson, no?

Now Houston we do have a problem.

Parkson Holdings is now 5.47!

What to say? What recommendation to give Parkson?

Well, this is what OSK wrote.

And so Parkson now have a TP of 6.60.

Now this is where Business Times could be more accurate and practise some fair reporting. This 6.60 is an upgraded target price from 5.50. A target given just less than 2 months ago.

Oh yeah, Parkson soared yesterday too! LOL! It closed at 5.64. The boss could be mighty happy because there is a chance for him to dispose more shares at a higher price! See the share disposals mentioned in the posting: Life Is Grand For Parkson Holdings. Would he be selling more? Would he? Let's hold our breath and wait.

Now back to issue of buying Parkson the stock.

Let's discount the fact that while we buy, the boss could be disposing more shares.

Let's have a look at where Parkson the stock is at right now.


And this is where Parkson is at today.

OSK is asking you to buy because it thinks because of the chances of 'gradual recovery' (mind you and not massive growth reasoning), consumer stocks like Parkson is worth a buy. It reckons it could be worth 6.60.

Just ignore the stock used to trade in the low 3.00s back in March.

That's the past.

Stock markets don't look at the past. They look at the future. And the future as OSK calls it, the stock should hit rm6.60.

How now my dearest?

You buy this?

And what about the time frame.

Isn't it a wonder?

2 months ago this company is worth 5.50. Now it should worth at least 6.60.

Why do a company's valuation change in such a short time frame? Why?

Or does the stock market sentiments rules over the company's valuation?

Market hot means the stock should be worth more?

How now?