Wednesday, January 11, 2012

LPI's bottom-line weighed down by share of Motor Pool losses

Results Update

LPI announced its results for QE31/12/2011 two days ago. Its net profit dropped 13% q-o-q to RM39.3 mllion while turnover rose by a marginal 1% to RM239 million. When compared to the corresponding quarter lst year, LPI's net profit rose 6.5% while turnover jumped by 25.5%.

The decline in net profit was due to the sharing of huge losses incurred by Malaysian Motor Insurance Pool (of which LPI's share was RM11.1 mil) & decline in investment income.

Table: LPI's last 8 quarterly results

Chart 1: LPI's last 24 quarterly results


LPI (closed at RM14.08 yesterday) is now trading at a PE of 20 times (based on last 4 quarters' EPS of 70.13 sen). Based on its CAGR of 15% over the past 4 years, LPI's PEG ratio is about 1.3 times. At this PEG multiple, LPI is deemed fairly valued.

Technical Outlook

LPI rebounded from its horizontal support at RM11.50. It has just surpassed its horizontal resistance at RM14.00- albeit on thin volume. If it can recruit sufficient buying support, the stock may continue its uptrend.

Chart 2: LPI's daily chart as at Jan 9, 2012 (Source: Quickcharts)


Based on mildly bullish technical outlook, LPI is rated a trading BUY (or a HOLD for those who have the stock). However, the stock is fairly valued, which means that its upside may not be substantial. If it can rally after the bullish breakout yesterday, you should aim only for a RM1.00 upside move. Good luck!


cheer said...

HI Alex

Need your advice on rsawit? Do you think this is potential growth counter ?


ryan said...

wondering how much mmip can affect mnrb…mmip had been a money losing vehicle!

Alex Lu said...

Hi cheer

Rsawit has a strong rally from RM0.25 to the present price of RM1.00. It accelerated in the past three months when it had a bonus issue & rights issue. At this level, I feel the stock is fully valued.

Alex Lu said...

Hi Ryan,

I don't know the mmip number & mnrb's share of it.