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Tuesday, July 11, 2017

LPI: Steady Earnings Continued

Result Update

For QE30/6/2017, LPI's net profit dropped 3.5% q-o-q or 68% y-o-y to RM68 million while revenue rose 1.5% q-o-q or 4.0% y-o-y to RM353 million. PBT rose marginally q-o-q due to better underwriting experience, primarily driven by 18.6% growth in net earned premium income. PBT dropped 61.6% y-o-y mainly due to realized gain of RM150.4 million on  disposal of investment in quoted equities.


Table 1: LPIs last 8 quarterly results

For the past 2 years, LPI's earnings had been erratic due to realized gain from the disposal of quoted securities, mainly PBBank shares. I have presented below, the reported & adjusted earnings. We can see that bottom-line is rising in a steady manner.


Graph: LPI's last 46 quarterly results

Valuation

LPI (closed at RM18.60 yesterday) is now trading at a trailing PE of 20.7times (based on last 4 quarters' EPS of 89.72 sen which is substantially free from gain from sale of equity investment). LPI paid out dividend totaling 82 sen during the period. This means LPI has a decent DY of 4.4%.

Technical Outlook

LPI is in a long-term uptrend, with support from the 10-month SMA line at RM17.00.


Chart: LPI's monthly chart as at July 10, 2017 (Source: ShareInvestor.com)

 Conclusion

Based on good financial performance, fair valuation & positive technical outlook, LPI is still a good stock for long-term investment. I maintain my rating as BUY ON WEAKNESS at the 10-month SMA line at RM17.00.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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