OSK Claims Offer For Southern Steel Is Reasonable

Oh gawd!

On today's Star Business: Hong Leong founder Quek believed to be buying Southern Steel

• ..... However, OSK Research analyst Ng Sem Guan views the offer as a reasonable one but suspects that long-term investors such as SSB co-founder Datuk Dr Tan Tat Wai, who collectively owns 7.9% in the company, may deem the offer price too low and are unlikely to accept the offer.
  
  He said the offer price represented a 5.7% premium to OSK’s original target price of RM1.94 and suggested that investors, especially those with a short-term investment horizon, accept the offer or dispose of the shares in the open market.
  
  Ng does not expect an upward revision to the offer price.
  
  He added that the further acquisition of SSB by Quek came as a surprise.
  
  “We had earlier thought his recent privatisation of Hume Industries may suggest a possible exit from the steel business as it gave him the flexibility to make a disposal at the right pricing and realise a huge pile of cash,” he said in a note.
  
  In a statement to Bursa Malaysia on Friday, the offeror said it intended to keep SSB listed if its shareholding level together with PAC rose above the 75% threshold but remained less than 90% after the offer lapsed.

Huh?

OSK's target price for Southern Steel is 1.94?????

I am truly baffled? How does OSK changes target prices so fast like that? How could a company's value swing from 2.04 to 3.04 to 1.94 in less than one year? Yeah eight months to be precise!

As mentioned in the posting, Southern Steel Privatisation Offer

• I was left baffled. How, where, when and why did OSK suddenly make its decision to change it's target price from rm 2.12 to rm 3.04? (huhu... that's a 43% increase in target price hor. From Nov to Jan.. can the valuation of a company suddenly increase by a whopping 43%???? Well, apparently in OSK stock recommendation universe it can!)

From Nov 2009 to Jan 2010, target price went from rm 2.12 to rm 3.04. Best of all, one of the MAIN REASON and justification given was that Southern Steel could be a potential M&A target play!

OSK now claims its target price is only 1.94.

But if it did... it's even more incredible!

Let's see...

Nov 2009 target price 2.12
Jan 2010 target price 3.04
Current target price 1.94!!!

huhu!

Now since OSK covered Southern Steel under Bursa CBRS scheme, I decided to do a quick search.Here's my search results. Only 2 hits!

1. March 2010: Southern Steel: A Pleasant Surprise ( BUY: Target Price 3.04)
2. May 2010: Southern Steel: Alert on Medium Term Outlook (HOLD: Target Price 2.50)!!!

huhu!

In May 2010, OSK gave it a target price of rm2.50!

They now claim muted M&A excitement! And that Southern Steel is falling below estimates! (Now GLEE! (yeah I used it.. that four letter word. :P), the higher than normal estimates were assigned by yourself initially. So you cannot blame Southern Steel to be falling below estimates can you?)

huhu!

How?

From a CBRS user perspective. ( Let's assume one is. )

So OSK Research covers Southern Steel under Bursa CBRS Research reports.

November 2009, it says BUY with target price 2.12. link to research report on Bursa website

It then went on made a huge upgrade on Southern Steel's Target Price on 20th Jan 2010 report but that report was not loaded in Bursa website!

From 2.12 to 3.04, big upgrade yes? Important? And you think OSK would have shown the CBRS users some respect by loading that said report!

March 2010, all the CBRS user sees is Southern Steel target price is suddenly changed to 3.04.

So how could the investor know that OSK had made such an incredible alteration with its Target Price recommendation for Southern Steel.

And then on May 2010, OSK downgraded Southern Steel to a HOLD with a target price of 2.50.

The same analysts now appears in the media and claims his target price is only 1.94! How? Why wasn't the report loaded into Bursa CBRS??? Why not???

And he claims that the offer price of 2.05 for Southern Steel to be reasonable!

Why?

Cos the offer price represented a 5.7% premium to OSK’s original target price of RM1.94!!!

huhu!

What EXACTLY is his meaning of OSK original target price of 1.94??

ORIGINAL TARGET PRICE OF 1.94????????

ORIGINAL TARGET PRICE OF 1.94????????

ORIGINAL TARGET PRICE OF 1.94????????

ORIGINAL TARGET PRICE OF 1.94????????

!!!!!

What's the recent target prices?????

Nov 2009, it was 2.12
Jan 2010, it was 3.04
May 2010, it was 2.50
Jul 2010, it is NOW 1.94

Who in Jan 2010 said the following:

• "We think Southern Steel may easily carry a price tag of above RM3 per share at 8.0 times normalised earnings if a major block is offered to the market. This, together with the good results and a more promising 1H, prompts us to maintain our BUY recommendation with 12-month target price of RM3.04," it said.

Well apparently in OSK Stock universe, anything and anyhow also..... CAN!