Wednesday, March 20, 2013

Takaful & BIMB- the rise continue?

Yesterday, Takaful broke above its recent high of RM6.33 (see Chart 1). It gained 55 sen to close at RM6.97. With this breakout above its all-time high, Takaful is expected to continue with its uptrend. However, when you look at the long-term chart of Takaful (see Chart 2), you can see that the share price had risen by more than four-fold in the past 2 years, from RM1.50 to RM6.97 yesterday. Can this rally sustain?

Takaful's financial performance has improved sharply in FY2012. Its net profit rose from RM77 million to RM101 million while revenue soared to RM1.61 billion from RM1.35 billion previously. Its EPS increased from 47 sen to 62 sen. [Note: Takaful's net profit for FY2010 was RM61 million while its revenue was RM1.73 billion.]

At the close of RM6.97, Takaful is now trading at a PE of 11 times, which is fairly attractively. Its Price to Book is relatively high at 2.3 times (based on Net Assets p.s. of RM3.07 as at 31/12/2012) but can be justified due to strong earning growth. OSK has a report on Takaful which placed the target price for the stock at RM8.00 (via i3investor.com).


Chart 1: Takaful's weekly chart as at Mar 19, 2013 (Source: Quickcharts)


Chart 2: Takaful's monthly chart as at Mar 18, 2013 (Source: Tradesignum)

The alternative to Takaful- a relatively small stock with outstanding share issue of 162.8 million shares- is its holding company, BIMB. BIMB -with an outstanding share issue of 1.07 billion shares- tends to follows in the same trajectory as Takaful. As noted previously, the time lag between an upside move for Takaful & a similar move by BIMB is about 1.5 months. This time lag may have widened to 2 months.

BIMB's financial performance has also improved over the past few years. For FY2012, BIMB's net profit rose from RM212 million to RM251 million while revenue rose from RM2.04 billion to RM2.52 billion. For more, go here.

At a close of RM3.31 yesterday, BIMB is now trading at a PE of 14 times (based on FY2012 EPS of 23.5 sen) or at a Price to Book of 1.8 times (based on Net Assets p.s. of RM1.89 as at 31/12/2012). While BIMB's PB ratio is lower than Takaful's, its PE ratio is higher. Its earning growth is slower than Takaful's.


Chart 3: Takaful & BIMB''s weekly chart as at Mar 19, 2013 (Source: Quickcharts)

Based on the above, Takaful could be a good trading BUY. For those with lower risk tolerance, you may consider BIMB which may follow in the upside move after a short delay.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Takaful & BIMB.

8 comments:

vincent chua said...

Hi Alex,

What do you think of Nestle technically? It is above RM60 for few days already.

leslieroycarter said...

Hi Alex:
May u comment again on the prospects for kseng. Does this share still having the potential to rise against the curent run up? Your previous estimate for this share @ RM17 still intact or the scenario has changed?

leslieroycarter said...

Hi Alex :
Do your previous write up on kseng and its potentials still intact or it has changed with the passing of time? Recent event on 108 tax credit has been the talk of the town and leading to the share run up with bigger vol changing hands. Do u think it can touch your prediction of RM 17 or RM6 by HwangDBS?

Stock tips said...

Nice Information! I personally really appreciate your article. This is a great website. I will make sure that I stop back again!. Stock Tips

Alex Lu said...

Hi leslieroycarter

There is a good write-up on KSeng in the Edge this week. This stock has a few positive points:

1. Technically speaking, it has broken above the 'horizontal' resistance at RM4.00 in end Dec 2012. It rallied to RM4.70 before succumbing to profit-taking in mid-Feb 2013. After that it rallied afresh to a high of RM5.33 last week. I expect this to continue.

2. The stock has been valued at RM6 by HDBS (as noted by you). See the link below.

3. Finally, a bumper dividend will happen soon.

With regards to my earlier projection of the stock, you have to adjust that by the subsequent bonus issue of 1 for 2 in Mar 2011. The adjusted target could be RM11. However, I would suggest that you take it with a small pinch of salt.

**********************************

http://www.theedgemalaysia.com/highlights/228036-hot-stock-keck-seng-roars-on-possible-dividend-windfall.html

Alex Lu said...

Hi vincent chua

Nestle had a strong run in the past 5 years. I think it is due for at least a price consolidation for a while. That consolidation may see the stock trading sideway between RM50-60.

Billy Teo said...

Hi Alex,

how about DLADY.

Rgds

Alex Lu said...

Hi Billy Teo

DLADY is trying to re0test its all-time high of RM49.40. If it can surpass that level, it may go higher.

Despite the positive technical outlook (with uptrend in-tact), DLady is highly priced as it is trading at a PE of 35 times.