1) In QE31/3/2009, its pre-tax profit dropped by 21% q-o-q or 3% y-o-y due to lower net interest income of RM20 million as a result of 2 downward revision in OPR and lower non-interest income of RM16 million due to lower forex profit & other fee income.
2) In QE30/6/2008, its pre-tax profit dropped by 33% q-o-q or 24% y-o-y to RM184 million due to increased specific provision & lower recoveries.
Other than the above 2 quarters, HLBank's performance has been fairly satisfactory. From Chart 1, we can see that HLBank's top=line & bottom-line are in a steady uptrend.
Table: HLBank's 8 quarterly results
Chart 1: HLBank's last 14 quarterly results
HLBank (closed at RM5.90 yesterday) is now trading at a trailing PE of 10.2 times (based on last 4 quarterly EPS of 58 sen). This compared favorably to Public Bank which is trading at a trailing PE of 14.7 times (yesterday's price of RM10.30 & annualized EPS of 70 sen) or Commerce which trades at a trailing PE of 14.6 times (yesterday's price of RM10.10 & annualized EPS of 69 sen). If we valued HLBank at a 10%-discount to Public Bank & Commerce's PE multiple, then HLBank's fair value could be RM7.50.
From the weekly chart, HLBank appears to have broken above the downtrend line that stretches back to early 2007. It is presently testing the strong horizontal resistance at RM5.90-6.00. A convincing break above the RM6.00 level could be the start of a rally for HLBank.
Chart 2: HLBank's weekly chart as at July 20, 2009_10.30am (Source: Quickchart)
Chart 3: HLBank's monthly chart as at July 20, 2009_10.30am (Source: Quickchart)
Based on satisfactory performance, attractive valuation & nice technical set-up, HLBank could be a good BUY for medium-term. It could even be a trading BUY if the share price surpassed the RM6.00 level convincingly.
PS- My previous calls on HLBank have not been on target (here & here).
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