A fundamental research report and a technical report for Astro Malaysia Holdings is review from OSK Investment Bank research team recently, Astro share price is trading below its IPO price of RM3.00 to-date except on its debut day of the IPO. Let's see how OSK evaluate Astro on its 26th December 2012 reports,
At the technical side, OSK have this to say on its 2nd January 2013 report,
Astro should rise further if it can close above the RM3.00 resistance level, at which a position can be initiated if this happens, with a close below RM2.90 as stop-loss. The price target is RM3.20, should the intraday high of RM3.11 be broken. Failure to get above RM3.00 will likely see the stock go lower, with supports seen at RM2.75 and RM2.60.
The report is base on the chart that show its closing of RM3.00 on the 31st December 2012, which for those who monitoring this stock on that day, may notice that the closing of RM3.00 is push up last minutes during pre-closing session, most of the time the price actually hovering at RM2.92 to RM2.95 on that day.
For the valuation wise, if one just using the normal PE valuation, it seem Astro trading at a very high valuation, since OSK is using FCFF valuation for Astro, one should check what is all about FCFF and do you feel comfortable with this valuation on this Company.
FCFF definition under Investopedia website,
Definition of 'Free Cash Flow For The Firm - FCFF'A measure of financial performance that expresses the net amount of cash that is generated for the firm, consisting of expenses, taxes and changes in net working capital and investments.
Investopedia explains 'Free Cash Flow For The Firm - FCFF'This is a measurement of a company's profitability after all expenses and reinvestments. It's one of the many benchmarks used to compare and analyze financial health.
A positive value would indicate that the firm has cash left after expenses. A negative value, on the other hand, would indicate that the firm has not generated enough revenue to cover its costs and investment activities. In that instance, an investor should dig deeper to assess why this is happening - it could be a sign that the company may have some deeper problems.
Read more: http://www.investopedia.com/terms/f/freecashflowfirm.asp#ixzz2GobyPm00