Edison Valuations

[Crackity]

Does anyone believe any of their research?

I immediately award one notional black mark to any listed firm who engage their services...

Here is today's.

Research provider Edison placed a bullish valuation on Cooks Global Foods this week.

But the 23c per share price target - more than 90 per cent above the current price - is based on the NZAX-listed Esquires coffee house franchisor achieving the highly ambitious target of boosting store numbers from 77 to 710 by the 2021 financial year.

It is also predicated on the company completing a $9 million capital raising from China's Jiajiayue Group and Cooks executive chairman Keith Jackson. The company is also looking to raise another $9 million through a public offer.

Jackson told Stock Takes in January that Cooks was considering raising capital through listing on NZX's new NXT market.

The Edison report, paid for by Cooks, said negative earnings were anticipated in the near term as the company co-invests with franchisees on the refurbishment of another 22 British stores, as well as establishing a five-store "beachhead" in the United States.

The Auckland-based firm posted a $4 million loss for the 12 months to March 31.

[Harvey Specter]

Does anyone believe any of their research?

I immediately award one notional black mark to any listed firm who engage their services...mmm Read the SEA one today. Target price of 2.1c. Not sure when that target was for because they also weren't sure if the options (1.5c) would be in the money in over a years time.

[Crackity]

mmm Read the SEA one today. Target price of 2.1c. Not sure when that target was for because they also weren't sure if the options (1.5c) would be in the money in over a years time.

Yes - Apathy is amusing me on the SEA thread...

My valuations seem to focus on cash flows - Edisons seem to focus on possible ( though unlikely ) potential scenarios.

btw - half way thru season 2 of Suits on Netflix - you do have fun days Harvey :)

[Harvey Specter]

btw - half way thru season 2 of Suits on Netfix - you do have fun days Harvey :)Not having as much fun in season 5 :scared:

[Harvey Specter]

The concern has to be that these are the guys that NZX is paying to provide research on the NXT companies. If people dont trust them, think they are too optimistic, or believe managements plans, then they become worthless.

Take for example SEA. They assume they will raise the full $9m so can complete the plant. If that happens, then sure, they will be able to produce heaps and you have to assume it will get sold. But what if they only raise $5m. How do they complete the plant and what impact does that have on cashflow (more interest expense?) and shareprice.

[Crackity]

The concern has to be that these are the guys that NZX is paying to provide research on the NXT companies. If people dont trust them, think they are too optimistic, or believe managements plans, then they become worthless.

Take for example SEA. They assume they will raise the full $9m so can complete the plant. If that happens, then sure, they will be able to produce heaps and you have to assume it will get sold. But what if they only raise $5m. How do they complete the plant and what impact does that have on cashflow (more interest expense?) and shareprice.

In that scenario Heartland get a half finished fish oil plant.....

You raise very valid concerns about NXT.

[blackcap]

The concern has to be that these are the guys that NZX is paying to provide research on the NXT companies. If people dont trust them, think they are too optimistic, or believe managements plans, then they become worthless.

Take for example SEA. They assume they will raise the full $9m so can complete the plant. If that happens, then sure, they will be able to produce heaps and you have to assume it will get sold. But what if they only raise $5m. How do they complete the plant and what impact does that have on cashflow (more interest expense?) and shareprice.

They also valued CRP at $1.70 for a very long time when the shares were trading between 20 and 40 cents... I take them with a grain of salt, no in fact just ignore them to be fair.

[Harvey Specter]

You raise very valid concerns about NXT.
That is why everyone is trying to skip it and move, IPO straight to the NZX

[beetills]

From memory Edison also did valuations for Rubicon and Tenon which were both very north of their share price.

[Harvey Specter]

From memory Edison also did valuations for Rubicon and Tenon which were both very north of their share price.Ive never seen a 'sell' valuation.

[trader_jackson]

I would have to agree in respect to their valuation on PEB, although I do think it will (eventually) become 'true', it is also still at a very big premium to the current share price.

[kiwidollabill]

I would have to agree in respect to their valuation on PEB, although I do think it will (eventually) become 'true', it is also still at a very big premium to the current share price.

Their 'revenue' figure is 50% research grants (which is ignored). I do need much rigorous analysis in any of their reports

[skid]

sounds like most are in agreement on this one

[Crackity]

sounds like most are in agreement on this one


I'll pose another question - if Edison publish a research report on a particular company is that a definite sell signal to shareholders at that point in time ( and I know this may ruffle some PEB holders - it is not meant to!)

I suspect the correlation is actually quite high.

i'll do some research and post the results - I see your comment below Ratkin - any others spring to mind?

[ratkin]

Well they did one for Comvita a few weeks ago 7.16 target, and the price has shot up since about 20%

[Lola]

Well they did one for Comvita a few weeks ago 7.16 target, and the price has shot up since about 20%
,one swallow one summer.
tHese guys record is abismal.

[Crackity]

I'll pose another question - if Edison publish a research report on a particular company is that a definite sell signal to shareholders at that point in time ( and I know this may ruffle some PEB holders - it is not meant to!)

I suspect the correlation is actually quite high.

i'll do some research and post the results - I see your comment below Ratkin - any others spring to mind?



Late August 2014 to the start of August 2015 this is the list of NZX listed companies researched by Edison -

These you should have sold on the date of the report publication - NZOG / PEB ( 3 times ) / SLI ( 3 times ) / VML / NTL / CRP / GNE / TEN ( once )

and these are the companies you should not have sold on the date of the report publication - CVT ( 3 times ) / THL ( 3 times ) / TEN ( once) / HNZ


So 7 companies you should have sold / 3 you should have held......( and one appearing in both camps.....)

[blackcap]

Late August 2014 to the start of August 2015 this is the list of NZX listed companies researched by Edison -

These you should have sold on the date of the report publication - NZOG / PEB ( 3 times ) / SLI ( 3 times ) / VML / NTL / CRP / GNE / TEN ( once )

and these are the companies you should not have sold on the date of the report publication - CVT ( 3 times ) / THL ( 3 times ) / TEN ( once) / HNZ


So 7 companies you should have sold / 3 you should have held......( and one appearing in both camps.....)

From late August 14 till now.... the NZX has also move a fair chunk. Did the 3 you should have held outperform the index or lag it? Maybe they needed to be sold too as underperformers?

[Crackity]

The real question in my mind is "Is Edison worse than morningstar, or is that simply impossible?"

Maybe a question for next week - my gut feeling is possibly - Edison seem to be the ladies of the night of the research world - you pay you seem to get some positive "research".....:)

[skid]

The real question in my mind is "Is Edison worse than morningstar, or is that simply impossible?"

Guess the real question is should investors listen to either---Does seem like a conflict of interest being ''hired for a valuation''

Brings to mind a property developer I once knew who would ''hire'' a valuer to value her property for an additional loan--she would just tell them it was to low and they would redo it.:scared: