Around the Traps ...with THE FERRET 07:44, Thursday, 2 September 2004
Sydney - Thursday - September 2: (RWE) *************************************
On August 12 TELSTRA (TLS) shares were $5.04 when the company announced a 20 per cent rise in net profit, a rise in dividend from 24c to 26c, a rise in special dividend from 3c to 6c and a further $750 million buyback.
The share price has not stopped falling since and the stock yesterday closed at $4.79, down 1c.
That's partly because the brokers have been belting it.
We read in the newspaper yesterday morning that following the "disappointing" result, UBS had slashed its valuation from $5.15 to $4.85,and cut profit forecasts for 2005 and 2006.
That's funny.
Just by chance we came across another paper from June 23 which said that UBS had retained the highest target price on Telstra shares by a major investment bank after Telstra promised $4.5 billion in special dividends and buybacks over the next three years.
UBS had a 12-month target price of $5.45 on the stock.
The firm's spokesman even said that the stock, then $5, probably had another 15c to 20c upside in it.
This means that in two and a bit months UBS went from a bull at $5.45, to a steer at $5.15 and now to a bear at $4.85.
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No such problems with BRAMBLES (BIL).
Like magic it has been transformed from laughing stock to market darling, thanks to brokers' upgrades.
The me-too buyers are scrambling for shares.
In the past two days the stock has gone from $6.15 ahead of the profit announcement to as high as $7.20 yesterday, before closing at $6.89, up 14c on the day.
Among the brokers Goldman Sachs JBWere has called it a short-term "outperform" and for the long term has boosted it from a "hold" to a "buy".
Its valuation for the shares is up from $7 to $7.40. UBS has lifted its rating from "reduce" to "neutral" and its valuation from $4.70 to $6.60.
CSFB has kept its recommendation at "neutral", but raised valuation from $6.50 to $7.25.
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BEACH PETROLEUM (BPT) was another example of restrained speculative excitement in the mining market.
Yesterday it announced that a drill stem test of the Christies-2 appraisal/development well had flowed oil at a rate of 1960 barrels a day.
"This is a pleasant surprise and hopefully will provide a bonus to the main target, the Birkhead Formation," managing director Reg Nelson said.
"It augurs well for possible further discoveries to the west of the Christies field as the westward oil migration path along this route is likely to have filled a number of traps."
The shares rose to 33c, fell to 31.5c and closed at 32.5c, up 2.5c. COOPER ENERGY (COE), a 25 per cent partner in the well, rose 1c to 22c.
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They may have burnt their fingers with CCI HOLDINGS (CHL).
The shares rose from 18c to as high as 20c on Tuesday before closing at 19c on turnover of 357,000 shares, the busiest day since a 961,000 session back on March 1.
It may have been someone taking a big punt on the year result, which came out yesterday.
Unfortunately for the share buyers CCI went down the chute, again, losing $1.85 million for the year.
The shares went down the chute, too ... by 3c to 16c before closing at 17c.
Life sure is tough in minnow-land.
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By the way, what is it with CCI that it takes so long to add up the numbers.
It's always one of the last to report and this year has missed the deadline by one day.
It's a bit slow in reacting as well.
We wrote a piece back on April 23 that CCI had finally twigged.
"It has come to the attention of the board," the company announced that day, "that selected shareholders have been approached with requests for the off market sale of their CCI shares."
It was about time.
The approach had been made on April 7.
The offer was 17c a share.
After yesterday's fall shareholders may well be thinking they should have accepted.
