Allianz returned to profitability

Allianz has just announced its results for 1Q2008 ending 31/3/2008. It reported a net profit of RM17.7 million on a turnover of RM398.8 million. This compared favorably to the results of the immediately preceding quarter, where it incurred a loss of RM35.4 million on the back of a much higher turnover of RM489.9 million. When compared to the same quarter last year, net profit increased by almost 5 folds while turnover was 44% higher.

The y-o-y improvement was attributable to strong organic growth as well as contribution from newly-acquired CAB. The turnaround from a net loss in 4Q2007 to a net profit in 1Q2008 was due to higher pre-tax profit of RM30.5 million (due to improvement in underwriting profit) as well as exceptional items incurred previously (such as a one-off integration cost of RM15.9 million for voluntary separation scheme, impairment & write-off of assets & branch relocation exercise, plus higher claims incurred & provision for bad & doubtful debts, following the alignment of the practices & procedures of CAB & the group).



Allianz (closed at RM3.80 as at May 26th) is now trading at a forward PE of 8.3 times (based on annualized EPS of 46 sen) or at a P/Book of 1.7 times (based on NTA per share of RM2.19). At these multiples, Allianz is deemed very attractive.

Chartwise, Allianz has now broken to the upside of its downtrend line. While the share has weakened a bit over the past few days, I believe that it will find buying supports at the horizontal support level of RM3.60.


Chart: Allianz's daily chart as at May 26, 2008 (source: Quickcharts)

Based on attractive valuation & good technical outlook, Allianz is a good pick for long-term investment.