MAA is a composite insurance company, offering both general insurance & life assurance services. Its past 8 quarterly results, which is tabulated below, are not very impressed.
During this 8-quarter period, losses were incurred in QE30/6/2006 due to temporary fair value loss of RM11.1 million on quoted equity investments in Sri Lanka by the non-insurance subsidiaries as well as in QE30/6/2005 & QE31/3/2005 due to additional provision made for diminution in value of quoted equity investments by the General Insurance Division of the local insurance subsidiary resulted from deterioration in the KLCI from 907.43 as at 31 December 2004 to 888.32 as at 30 June 2005.
MAA's share price has been declining from its high of RM3.30 in Feb 2004 to a recent low of RM1.35 in last October (see Chart 1 below). Since then, the share has recovered and was trading in a range between RM1.55 & RM1.65 for the past 5 weeks (see Chart 2 below). On Dec 1, MAA has broken above the RM1.65 level and today (Dec 4), it has broken above its downtrend line at the RM1.82 level.
With these 2 bullish breakouts, MAA's worst is now over. Over the next few days, the market will need to digest MAA's sharp 2-day rise. Thereafter, MAA could well be moving to higher level.
Notwithstanding the less-than-impressive financial performance, MAA's recent bullish breakouts mean that the share price may see greater height in the weeks or months ahead. A good entry level would be about RM1.82 level.
Chart 1: MAA's daily chart from Jan 2004 to 01 Dec 2006
Chart 2: MAA's daily chart from Jun 2006 to 01 Dec 2006
2 comments:
Hi Alex, since you touched on insurance, just would like to know your outlook for insurance companies?
I am positive on the insurance sector. The income of insurance company comes mainly from 2 sources i.e. underwriting & investment. The former will grow steadily & is a function of our population growth & lifestyle needs while the latter will be impact by the investment climate. Since we are entering a sweet spot in the next year (or two), the sector's earning should be positive.
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