Kurnia Asia Bhd ('Kurasia') is a holding company which wholly owns Kurnia Insurans (Malaysia) Berhad - the largest general insurer in Malaysia.
Recent Financial results
Kurasia's financial performance has improved slowly over the past 6-7 quarters after taking a huge loss of RM303 million in Qe30/6/2008. That net loss was mainly due to a 23.4%-increase y-o-y in Claims Expenses from RM877 million for FY2007 to RM1.082 billion for FY2008; a 11.1%-increase y-o-y in Management Expenses from RM212 million for FY2007 to RM235 billion for FY2008; and, a 48.9%-drop y-o-y in Investment income from RM182 million for FY2007 to RM93 million for FY2008. It is hearty to note that the increased Claims Expenses was due to higher claims provision in compliance with more stringent reserving requirement under RBC framework.
Table 1: Kurasia's last 8 quarterly results
Table 2: Kurasia's Huge Loss of RM303 million in QE30/6/2008 explained
Chart 1: Kurasia's 8 quarterly results
Valuation
Kurasia (closed at RM0.56 today) is now trading at a PER of 7.6 times (based on last 4 quarters' EPS of 7.36 sen). At this PER multiple, Kurasia is deemed inexpensive.
Technical Outlook
From the chart below, we can see that Kurasia has recently tested in its medium-term uptrend line support at RM0.50. The strong rebound today (with gain of 4 sen) may indicate that this stock is likely to continue with its prior uptrend.
Chart 2: Kurasia's daily chart as at May 11, 2010 (Source: Tradesignum)
Conclusion
Based on steadier financial performance, undemanding valuation & good technical outlook, I believe Kurasia could be a good stock for medium-term investment.
11 comments:
Dear Alex,
VT has scored another feast by selling (70%)his very own Ascot which holds the Football gambling permit for 525M, !
Then ,Berjaya group will issue RIGHT ISSUE FOR 600M,for "Financing" the above 'Purchase'?
IS THIS A FANTASTIC Achievement in Bursa Listing?
Hi Mulia,
Jaks is likely to move sideway at RM0.75-80. On further weakness, it may slide to test its medium-term uptrend line support at RM0.68-70.
Salcon is a good BUY at RM0.65-66 (the support of its medium-term uptrend line). Its upside will be capped by the short-term downtrend line resistance at RM0.75-76.
UEMLand is likely to be range-bounce between RM1.20-1.50. Its medium-term uptrend line support is at RM1.20-25.
Since all 3 stocks are not far from their support level, you may want to just wait for a rebound. If you like the stocks, you can buy some at the support level. I, for one, like Salcon for its exposure to the water & sewerage sector.
Hi Alex ,
can I have the comment for kimhin (5371)?
Hi kyong,
I think investors are getting too excited about this sport betting business. For risk management, this business should entail proper matching of bets to reduce "opening positions". In the end, it would be like stockbroking, except Ascot Sports will be a market maker- running the book & enjoying higher profit margin. By paying RM525 million for 70%-stake in Ascot Sports, BJCorp is valuing the business at RM750 million. If we assumed a PER of 15 times for Ascot Sports (the same PER enjoyed by BJToto), then the business should bring in net profit of RM50 million. Can it? That's the big question!
The two biggest names in the sport betting business is William Hill and Ladbrokes. For 6-month ended June 2009, William Hill "said that underlying operating profit... was £131.8m". Ladbrokes released disappointing numbers for the 4 first 4 months of 2009 ended April where its "profit before interest, tax and non-trading items from high rollers fell to GBP 25 million compared to GBP 40 million last year". These companies have well-established betting operations which span the globe. Ascot Sports will only operate in Malaysia. I have serious doubt it can achieve a net profit approaching RM50 million per annum.
Links to the stories on William Hill & Ladbrokes:
http://www.guardian.co.uk/business/2009/aug/04/william-hill-poor-results
http://www.recentpoker.com/news/ladbroks-profit-2835.html
Hi phkoay
Kimhin is a profitable tile makers. It reported a net profit of RM22.5 million on turnover of RM243 million for FYE31/12/2009. EPS is 16 sen. At the current price of RM1.27, it is trading at a PER of 8 times. It may potential trade up to a PER of 10 times or at RM1.60.
Chartwise, it is now testing its medium-term uptrend line support at RM1.25-27.
Based on reasonable valuation & good technical support, the stock could be a good stock for medium-term investment.
Dear Alex,
Your analysis is excellent on the two top World's betting companies.
The interesting part is someone has just managed to benefit RM 500M irrespective of future earning potential !!
Analysts have even predicted that due to the potential higher taxation and higher pay-out structures of this New BETTING game, it may only bring probable profit of 2--5% to Bjcorp, provided if nothing unforeseen happens ?
So some of our Bursa Share Investors may be too excited or too passionate on this betting company.
Thanks for your comments
Hi kyong,
I forgot to mention that Ascot Sports will be giving a profit guarantee of RM375 million for a period of 3 years. This guarantee is backed by securities deposit of RM80-81 million & BJCorp will be withholding RM125 million of the purchase consideration for the same purpose. This guarantee is a real comfort, probably disarming critics who are lukewarm on the deal.
hi alex. please comment on TM. thx alots
Dear Alex,
Petra (7108) Proposed for right issue, shall we buy now or after the right? Thanks for the advise..
Any comments or further enlightenment on what is happening to KURASIA now. Trading at 41 cents today.
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