MBSB- bottom-line finally dipped!

Result Update

For QE30/9/2013, MBSB reported a net profit dropped 20% q-o-q but rose 48% y-o-y to RM133 million while its revenue rose 5% q-o-q or 24%  y-o-y to RM644 million. The q-o-q drop in net profit was mainly as a result of higher impairment losses on loans, advances and financing; and, operating expenses, which were partially set-off by the profit contribution from Islamic operations (which in turn is due to continuing growth of personal financing portfolio and higher other operating income).


Table: MBSB's last 8 quarterly results


Chart 1: MBSB's last 37 quarterly results

From Chart 1, we can see that the bottom-line has dropped after 4 years of strong growth. Is this a short break in the growth trend or is this the beginning of the steady decline due to poorer credit quality? Only time will tell.

Valuation

MBSB (at RM2.82 yesterday) is now trading at a current PE of 8.1 times (based on the annualized EPS of 34.84 sen, which is computed using the EPS for the last 2 quarters). At this PE, MBSN is still deemed reasonably priced to factor in the possible decline in earning for the next few quarters (due to concern about collection).

Technical Outlook

MBSB is in a steady uptrend since breaking above the strong horizontal line at RM0.85 in March 2011. Its immediate resistance is at the horizontal line, ef at RM3.20 while its immediate support is at the 40-week SMA line at RM2.74 & thereafter at the long-term uptrend line, ss at RM2.55.


Chart 2: MBSB's weekly chart as at Oct 22, 2013_on linear scale (Source: quickcharts)

If you look at the semi-log chart (Chart  3), you will see that MBSB has broken its long-term uptrend line, SS. For stocks that had a strong rally, the semi-log charts give a better reading whether the trend is still intact or at the very least, they give an early warning that the trend lines have been violated. As such, I am inclined to go with Chart 3 below- that MBSB has transitioned to a sideway trend for now.

  
Chart 3: MBSB's weekly chart as at Oct 22, 2013_on semi-log scale (Source: Tradesignum)
 
Conclusion

Based on poorer financial performance & mildly negative technical outlook, I believe it is advisable to take some profit on MBSB.

Note: 
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, MBSB.