LPI has just reported its results for QE30/9/2011. Its net profit increased by 44% q-o-q or 25% y-o-y to RM45 million while its turnover increased by 10. 5% q-o-q or 21.5% y-o-y to RM236 million. Increased turnover was due to higher gross premium underwritten, which led to higher underwriting profit.
Table: LPI's last 8 quarterly results
Chart 1: LPI's last 22 quarterly results
Valuation
LPI (closed at RM11.78 yesterday) is now trading at a PE of 17 times (based on last 4 quarters' EPS of 69 sen). At a PE at 17 times, LPI appears fully-valued. However, when you compared this with its average growth for the past 4 years of 15.4%, LPI has a PEG ratio of 1.10. For a stock that pays high dividend of about 50 sen, the PEG ratio will be negatively depressed. With this in mind, I would rate LPI valuation as undemanding, with potential for further upside.
For more on PEG ratio, go here.
Technical Outlook
Chartwise, LPI has recently tested its horizontal line of RM11.50. If this support can hold, the stock may recover back to its recent high of RM14.00. A break below the horizontal line of RM11.50 could send the stock to the psychological RM10.00 level. Below that, it should have very strong support at the horizontal line of RM8.50, which coincides with the long-term uptrend line at RM8.50.
Chart 2: LPI's monthly chart a sat Oct 3, 2011_plotted on log scale (Source: Tradesignum)
Conclusion
Based on good financial performance, undemanding valuation & positive technical outlook, LPI is still a good stock for long-term investment.
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