AIGB reported good results for 4Q2006

AIGB has just announced its results for 4Q2006. Its net profit has increased by 94% q-o-q or 80% y-o-y to RM127.5 million. This was achieved on a turnover that has increased 21% q-o-q or 74% y-o-y to RM437 million. The improved net profit was attributable to a RM75 million higher net gain from sale of securities held for trading as well as a RM67 million higher revaluation gain from securities held for trading. In another word, AIGB has benefited significantly from the current stock market rally which started in the fourth quarter last year.

If AIGB can duplicate its 4Q2006 performance again for the FY2007, we can expect the company to earn about 36 sen per share. Based on its closing price today of RM1.89, AIGB would be trading at a prospective PE of 5.3 times. This is very attractive.

Notwithstanding the current bullish sentiment in our stock market, I do not believe AIGB can repeat its good performance in 4Q2006 for FY2007. A more likely earning scenario for FY2007 is one that lies between 4Q2006 & 3Q2006. If we annualized that EPS (i.e. 2H2006 figure), we can arrive at an earning of about 29 sen per share for FY2007. This will give AIGB a PE of 6.5 times, still quite cheap..... (added at 8.00 a.m. on February 14, 2007)


Table: AIGB's 8 quarterly results up to 4Q2006

AIGB share price is still trapped in its medium-term downtrend line, with resistance at RM1.90. In the past few days, it has tested & exceeded that downtrend line. Unfortunately, it fell below that line again this week due to price correction. A break above the RM1.90 (or, even RM2.00) could signal the beginning of the bullish phase for AIGB.

Based on the above, I would recommend slow accumulation of AIGB at the current level. Your buying should accelerate if the share price break above the RM1.90 (or, RM2.00).


Chart: AIGB's daily chart as at Feb 13