MBSB – Why most stocks Analaysis from securities firms are useless to follow?

A month ago when few securities firms downgraded MBSB to RM 0.78 or even lower.  Same as some downgraded CIMB to RM 3.90.  If you like to follow these houses I probably guess you may find hard to profit from your investment.  Take an example of MBSB, it is true that due to impairment exercise caused their earnings down with a high PE from 20 to 30 times.  But if you understand the reason behind and it’s continuous increase in revenue with solid corporate plan. You will find not hard to keep buying the stock due to it known factors. Beside, EPF holding nearly 70% with CMY holding another 10%.  That’s a stunning 80% holding with only 20% free float.

Securities analyst will tell you that the fair value is at RM 0.78 or latest today a reviewed said it worth maximum RM 1.09.  I will not blame them as this is part of their game.  Their unit trust fund managers are also not able to buy the share due to the PE ratio.  But if in this case impairment is done.  The profit of current loan base of MBSB will provide a strong PE and that time securities houses will upgrade them to buy call.  But that’s probably when the price hit RM 1.5 to 1.6 and many going to enter at a higher price.  By the time they ask you to sell.   Probably the stocks price already drop drastically that you may need to cut losses.

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