Monday, May 23, 2011

Allianz- attractive but not that cheap

Recently, I posted on Allianz and I described the stock as cheap & good. A reader, Ramatex has pointed that I should include Allianz-PA in determining the valuation of Allianz. Allianz-PA is convertible to ordinary share on the basis of 1-to-1 starting August this year. For more on Allianz-PA, go here.

Based on the last 4 quarters' net profit of RM139.710 million & total number of ordinary shares & Allianz-PA outstanding of 346.206 million, the EPS is about 40 sen. As such, Allianz (closed at RM5.10 on May 18) would be trading at a PE of 12.75 times. As such, Allianz is still quite attractive but not as cheap as I have earlier posted.

Thanks to Ramatex for the hat tip.

5 comments:

Damon Lim said...

Hi Alex,

Would you comment of the recent drop of HAPSENG and is it a good buy for future?

Alex Lu said...

Hi JinL88

HapSeng broke below the horizontal line RM5.30. Its next support is the psychological RM5.00 level and thereafter the horizontal lines at RM4.80 & RM4.20. These support levels could be possible entry to the stock. However, it is safer to look for a clear reversal or the completion of a bottoming phase before entering the stock.

On the other hand, if you are stuck in this stock, the resistance level to look out for is the downtrend line at RM5.75-5.80 or the 20-day SMA line at RM5.65-5.70. Those could be good level to reduce your position in the stock.

Akagi Shigeru said...

Alex :
Low PE could be seen as a undemanding but not necessary cheap. Likewise high PE could represent demanding but not necessary expensive. Since it is a insurance company which is more to " balance sheet " centered business, valuing it by NTA should be appropriate to me. NTA is a key element of most the M&A insurance companies. At 5.00 a piece Allianz is trading at ( 5.00/3.73 = 1.34 X NTA ~ this includes the Allanz PA effect ) which is consider cheap if we compare it to LPI ( RM13.60 ~ ( 5.7 x NTA )

Alex Lu said...

Hi Akagi Shigeru

I agree. For financial firms (incl. insurance companies), a good valuation method to use is the Price to Book. As you have rightly stated, Allianz is quite attractively priced to its book value.

st said...

Hi Alex,

Ok to buy in Allianz-PA as compared with Allianz at RM5 level now? Thks.