Allianz's net profit dropped by 19.3% q-o-q to RM33.7 million on the back of a 2%-decline in turnover to RM653 million. The sharp drop in net profit is due to the transfer of surplus of RM15 million from Life Funds to Shareholders' Funds in QE31/12/2010. When compared to the same quarter last year, net profit was up 45% while turnover was up 4%.
Table: Allianz's last 8 quarterly results
Chart 1: Allianz's last 21 quarterly results
Valuation
Allianz (closed at RM5.10 yesterday) is now trading at a PE of 5.6 times (based on last 4 quarters' EPS of 91 sen). As such, Allianz is deemed very attractive.
Technical Outlook
Allianz is in an uptrend line with support at RM4.40-4.50. Its immediate support is at the 50 & 100-day SMA lines at RM5.06-5.08 (which would be a good entry to this stock).
Chart 2: Allianz's daily chart as at May 18, 2011 (Source: Tradesignum)
Conclusion
Based on continued good financial performance, attractive valuation and positive technical outlook, Allianz remain a good stock for ling-term investment.
Hi Alex
ReplyDeleteIn spite of the growth in EPS, the dividend payout is low? Any reason for this?
Hi Alex,
ReplyDeleteIn spite of the growth in earnings, the dividend payout is low? Any reason for this?
Thanks.
Dear Alex,
ReplyDeleteI've no accounting or business background. I read that for most businesses, EBITDA MARGIN% is the best ruler to see a company's ability to earn profit. But after some reading, I still quite blur of what actually is it, as well as how it compares with other parameters.
Please correct me if I was wrong. I appreciate your help very much! I hope to see your explanation in "non financial terms" but in "daily use english words". Once again, thanks!!
1. Is EBITDA MARGIN% means the ability of a company to make profit while take into account of the company's operational cost as well as investments putting in?
2. And CAGR growth% simply means how much a company's profitability is without taking into account of how much it spends?
3. difference between EBIT and EPS is just EBIT is exclusive of tax and EPS inclusive of tax?
4. how ROE and ROA comes into picture while comparing with EBITDA MARGIN?
Sorry for the long question. I hope you can help me. Thanks!!
Hi Alex,
ReplyDeletethe 4 qtr EPS 0.91, think u need to use ALLIANZ+ALLIANZ-PA to calc the PE, so should be 11.xPE
Hi JR
ReplyDeleteI agree that the dividend payout is very low. I have no idea why it doesn't want to raise the dividend a bit since its Life Insurance Funds are enjoying some surplus & it need not be too stingy in order to build up its equity & reserves.
Hi ramatex
ReplyDeleteYou made a very important point. I totally overlooked the ICPS aka ALLIANZ-PA. This instrument is convertible to equity on 1-to-1 basis. This will dilute the company's EPS to 40 sen. As such, the diluted PE is about 12.75 times.
Based on this, Allianz is still considered attractive but not screaming cheap!!!
Thank for the hat tip.
Hi Steve,
ReplyDeleteThe answer to your questions:
1. EBITDA stands for Earning before Tax, Interest, Depreciation & Amortization. So, EBITDA MARGIN is profit margin but excluding the few items. Why? If you want to compare two companies' operational profitability, you should make the comparison as level as possible. This means taking out the differences in debts level, tax position and depreciation & amortization policies.
2. CAGR stands for Compounded Annual Growth rate. This is the rate of growth of a company's earning.
3. EBIT stands for Earning Before Interest & Tax. It is Pre-tax Profit but you add back the Interest costs. EPS stands for Earning per share, which is Net Profit divided by outstanding ordinary shares (not share capital). The main purpose of computing EPS is to compare it with the share price in order to arrive at the Price to Earning (PE) multiple.
4. ROE & ROA stands for Return on Equity or Assets employed. When you compared two companies' ROE or ROA, the numerator is Earning (or Return). The higher EBITDA margin, the higher Earning. This would then lead to higher ROE or ROA.
I hope that would clarify your doubts. If need more, go to Investopedia University (the link is goven at the Resources section).