LPI: Top-line & bottom-line dipped sequentially

Result Update

For QE31/3/2014, LPI's net profit increased by 20% y-o-y but dropped 3% q-o-q to RM51 million. Its revenue was similarly mixed; increased by 7% y-o-y but dropped 6% q-o-q to RM278 million.  the Star newspaper reported that LPI Capital founder and chairman Tan Sri Dr Teh Hong Piow said the group would continue to strengthen its agency force and increase its distribution network in order to have a stronger foothold nationwide (here). The strengthening of its network is probably necessary as the group's revenue has for the first time dipped significantly- by dropping below the 4-quarter simple moving average (see Chart
 1 below).



Table 2: LPIs last 8 quarterly results


Chart 1: LPI's last 33 quarterly results

Valuation

LPI (closed at RM16.60 yesterday) is now trading at a PE of 17.5 times (based on last 4 quarters' EPS of 95 sen). At this PE multiple, LPI is deemed fairly valued.

Technical Outlook

LPI has pulled back to its 40-week EMA line support at RM16.30. LPI is likely to stay above this support for now. However, if this support is violated, the next strong support level is at RM15.00. 

Chart 2: LPI's weekly chart as at Apr 8, 2014 (Source: Tradesignum)

Conclusion

Despite the weaker q-o-q financial performance, LPI is still rated a HOLD due to reasonable valuation & positive technical outlook.

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, LPI.