Based on yesterday's closing price of RM6.00, HLBank is now trading at a trailing PE of 12.0 times (using the past 4 quarters' EPS totaling 50 sen) & at a P/Book of 1.79 times (using its NTA per share of RM3.35 as at 31/12/2007). At these multiples, HLBank is not expensive.
From the chart below, we can see that HLBank has been moving upward since making a low of RM0.52 in September 1998. After an initial sharp rise, the uptrend has been decelerated over time & one may draw three fan lines onto the chart. Currently, the price action is supported by the third fan line at RM5.80. In between, we can see 2 triangles where price consolidation took place. The stock broke to the upside of the second triangle in January 2007 (which was highlighted in this post), but that breakout did not lead to a steady uptrend. Instead the share price appears to be trapped in a range between RM5.80 & RM6.70.
Chart: HLBank's monthly chart as at February 14, 2008 (courtesy of Quickcharts)
Based in undemanding valuation, HLBank could be a good medium-term BUY. Its technical picture is not clearcut. While it is still in a long-term uptrend, its current price action is poor. Until the stock has recruited enough buying support, it maybe trapped in the range of RM5.80-6.70 for a while.
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