Tuesday, April 09, 2013

LPI- a good stock with a high price tag

Results Update

For QE31/3/2013, LPI's net profit dropped 11% q-o-q but rose 34% y-o-y to RM42 million while revenue dropped 5% q-o-q but rose 5% y-o-y. Bottom-line dropped q-o-q due to lower net earned premium and higher claims incurred.

Table 2: LPIs last 8 quarterly results

Chart 1: LPI's last 29 quarterly results


LPI (at RM13.70 as at 4.00pm) is trading at a PE of 17 times (based on last 4 quarters' EPS of 80.6 sen). At this PE multiple, LPI is nearly fully valued. It may command a PE of 18 times; thus giving a small upside of 80 sen.

Technical Outlook

LPi is still in an uptrend line with support at RM13.50. Its next support is the horizontal line at RM13.40. Its immediate resistance would be the high of RM14.40 recorded in January.

Chart 2: LPI's weekly chart as at Apr 9, 2013_2.40pm (Source: Quickcharts)


Based on good financial performance & still-positive technical outlook, LPI is rated a HOLD. However, the stock is trading at fairly high valuation and a strategy of selling into strength may be warranted.

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, LPI.

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