Yesterday’s market action saw the share price of Viz Branz (VB) rose more than 14% to as high as S$0.535 before correcting down to close at S$0.430 at the end of the day. However, a check with management revealed no change to its strategy or any significant developments in its geographical growth markets of China and Indochina. As such, the price action could be purely speculative in nature (sharp share price gains on high trading volumes). With renewed interest in Viz Branz following the strong rally in its share price, we advocate investors utilize this opportunity to realize some profits and re-enter at lower levels. We reiterate our HOLD rating at an unchanged fair value estimate of S$0.37 as we continue to like the counter for its promising 2H12 outlook and growth potential.
Strong rise in Viz Branz’s share price
Yesterday’s market action saw the share price of Viz Branz (VB) rose more than 14% to as high as S$0.535 before correcting down to close at S$0.430 at the end of the day. It was a continuation from Tuesday’s strong rally of 16.7%, which saw VB hit a then all-time high of S$0.455. In light of VB’s relatively light daily trading volume, the sharp gains on both days on unusually high volumes, came as a huge surprise to the market. However, management communicated to us that there were no changes to daily company operations, and also denied any knowledge of any developments regarding VB’s existing share ownership structure.
Speculation behind price action
In our last report issued on 14 Feb 2012, we raised our fair value estimate from S$0.33 to S$0.37 following VB’s impressive 1H12 performance, which produced record sales of S$91.2m. Since then, there have been no changes to VB’s management strategy and/or significant developments in its geographical growth markets of China and Indochina. As such, the price action could be purely speculative in nature (huge share price gains on high volumes).
Father-son tussle could be factor
The long-running tussle between VB’s CEO and its previous CEO (son and father relationship), which had arisen over the ownership of some company shares, could be the reason behind these speculative trading actions. This remains unresolved with the transfer of a 15% stake as the primary focus.
Investors should take profit; maintain HOLD
The ascent in VB’s share price has rejuvenated interest in Viz Branz. Investors should utilize this opportunity to realize some profits and re-enter at lower levels. We reiterate our HOLD rating at an unchanged fair value of S$0.37 as we continue to like the counter for its promising 2H12 outlook and growth potential.
Yesterday’s market action saw the share price of Viz Branz (VB) rose more than 14% to as high as S$0.535 before correcting down to close at S$0.430 at the end of the day. It was a continuation from Tuesday’s strong rally of 16.7%, which saw VB hit a then all-time high of S$0.455. In light of VB’s relatively light daily trading volume, the sharp gains on both days on unusually high volumes, came as a huge surprise to the market. However, management communicated to us that there were no changes to daily company operations, and also denied any knowledge of any developments regarding VB’s existing share ownership structure.
Speculation behind price action
In our last report issued on 14 Feb 2012, we raised our fair value estimate from S$0.33 to S$0.37 following VB’s impressive 1H12 performance, which produced record sales of S$91.2m. Since then, there have been no changes to VB’s management strategy and/or significant developments in its geographical growth markets of China and Indochina. As such, the price action could be purely speculative in nature (huge share price gains on high volumes).
Father-son tussle could be factor
The long-running tussle between VB’s CEO and its previous CEO (son and father relationship), which had arisen over the ownership of some company shares, could be the reason behind these speculative trading actions. This remains unresolved with the transfer of a 15% stake as the primary focus.
Investors should take profit; maintain HOLD
The ascent in VB’s share price has rejuvenated interest in Viz Branz. Investors should utilize this opportunity to realize some profits and re-enter at lower levels. We reiterate our HOLD rating at an unchanged fair value of S$0.37 as we continue to like the counter for its promising 2H12 outlook and growth potential.
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