Friday, February 03, 2012

MBSB suffered a q-o-q decline in its top-line & bottom-line (UPDATED)


MBSB is involved in the provision of personal financing, mortgage loans & financing & corporate loans & financing. The main reason for MBSB's strong financial performance is that it has expanded aggressively into the personal loan sector, with growth coming mainly from lending to government servants.

Recent Financial Results

In QE31/12/2011, MBSB's net profit dropped 12% q-o-q to RM84 million while revenue declined by 7% to RM347 million. Compared to the corresponding quarter last year, net profit soared 554% while revenue rose by 66%.

MBSB attributed the decline in its net profit on q-o-q basis to drop in other operating income, drop in net interest income & higher impairment allowances on loans. There was no information in the drop in Revenue. The decline in its top-line & bottom-line could raise some concern about MBSB's rapid growth. However, it must be noted that there were similar decline- in QE31/12/2010 & QE31/12/2009- which did not change the strong growth record of this company.

Table: MBSB's last 8 quarterly results
Note: (1) This is a new table. The earlier table contained a small error.
(2) The EPS was extracted the results announcement in the Bursa website.

Chart 1: MBSB's last 30 quarterly results

Valuation (UPDATED)

Earlier we arrived at a PE of 5.6 times for MBSB by dividing the closing price of RM2.23 by the last 4 quarters' EPS of 39.5 sen. However, two readers i.e. Malaysia Stock Talk & maverick have pointed that the EPS is not corrected. What is the correct EPS for the last 4 quarters? By dividing the total earning of RM325 million by outstanding shares of 1216 million, we would have a gross EPS of 26.76 sen. If we divide the total earning of RM325 million by outstanding shares & warrant of 1722 million, we would have a diluted EPS of 18.90 sen.

Using these numbers, we can arrive at the basic PE & net PE of 8.3 times & 11.8 times, respectively. Based on these revised PE multiples, MBSB is still considered reasonable but no longer cheap.

Technical Outlook

MBSB has risen steadily from less than RM0.50 in 2009 to above RM2.00 today. Its next resistance is at RM2.50 and then at RM3.00.

Chart 2: MBSB's monthly chart as at Feb 2, 2012 (Source: Tradesignum)


Based on satisfactory financial performance & reasonable (no longer cheap) valuation, MBSB is a good stock for long-term investment. However, we must monitor this stock closely as it has suffered a drop in its top-line & bottom-line in the latest quarterly results. If it is a one-off decline, we can hold on to this stock. If not, we may have to reassess our position.


Malaysia Stock Talk said...

Basic EPS 32.43 sen
Diluted EPS 27.15 sen

maverick said...

Hi Alex, MBSB has now an enlarged share base of 1215.5 mil.

Chun Mun said...

Hi Alex,
Would the spritzer profit recovery bring up the profit of YEELEE? Do you have any comment on YEELEE? Thank you.

Brian said...

Hi Alex, What is your opinion on Pelikan ?

Alex Lu said...

Hi Malaysia Stock Talk & maverick

You guys are right on the error in the EPS. However when I recomputed the gross & diluted EPS for the past 4 quarters, I arrived at 26.76 sen & 18.90 sen. I will post a note to the article (under the Valuation section).

Thanks for pointing out the error.

Alex Lu said...

hi Chun Mun

YEELEE should benefit from Spritzer's improved performance. Technically speaking, YEELEE is trapped within a descending triangle with resistance at RM0.95 & support at RM0.80-0.82.

luckystock2 said...

Hi Alex,
Any opinion on Media's technical outlook?

Andy Lau said...

HI Alex

expiry date 16/2/2016
exercise price 2.00
current guanchg price 2.61
ration 1:1
(2.61-2.00) / 1 = 0.61

Is this the right way to calculate?

Is Guanchg-wa too expensive now?

Pls advise. TQ

cheer said...

Hi Alex, pls advise Bolton

Anonymous said...

Hi Alex

Why there is no announcement make by YTL power regarding its subsidiary already secure 1Bestarinet from Ministry of Education. These 1Bestarinet project is worth 1.5b for 5yr contract and is extendable for under another 5 + 5 yr totally worth as much as 4.5b. I've call to check its validity, but according to person in charge, it is confirm that YTL comm secure 1bestarinet project, but there is no obligation for them to disclosed the detail in bursa, it just the normal course of running business........

Alex Lu said...

Hi luckystock2

Media broke above the resistance at RM2.60. Its next resistance is at RM2.80 & then RM2.90.

Alex Lu said...

Hi Andy Lau

Guanchg at RM2.55 & Guanchg-wa at RM1.14 now.

Guanchg-wa's main terms are:

expiry date 16/2/2016
exercise price 2.00
ration 1:1


The warrant is in-the-money, with intrinsic value of RM0.55 (arrived at by deducting the exercise price from the share price).

Conversion premium is RM0.59 (arrived at by deducting the intrinsic value from the warrant price).

My preference is to compute the premium in percentage as follows:

= (WP + EP)/SP X 100%

WP = warrant price
EP = warrant's exercise price
SP= share price

Using this method, you will arrived at a premium of 23%. That's a fair premium for a rising stock in a bullish market.

Alex Lu said...

Hi heer

Bolton has a breakout above the downtrend line at RM0.80. It also broke above its horizontal line at RM0.85. Its resistance is at the horizontal lien at RM0.95.

However, Bolton is a slow mover. Don't chase. Just wait for it to pullback to RM0.85.

Alex Lu said...

Hi hng

I guess if the impact is significant, the listed company should make the announcement in order to guide the shareholders & investing public at large.

Have YTLPower already announced this earlier?

Anonymous said...

Hi Alex

You can refer to these official document in regard to YTL comm already appointed as supplier and installer for internet:

The problem with YTL comm is its company secretary already confirm YTL comm already secure 1Bestarinet, but according to her, YTL comm is private company and only 60% own by YTL power, and its no their obligation to disclosed information to YTL power/YTL corp shareholder.....