LPI: Earnings dipped sequentially (Updated)

Result Update

For QE30/9/2015, LPI's net profit dropped by 12% q-o-q but rose 18% y-o-y to RM76 million while revenue rose 15% q-o-q or 16% y-o-y to RM350 million. The decrease in profits q-o-q was mainly due to the absence of a one-time gain of RM39.2 million on disposal of investment in equities that contributed to the higher profit for QE30/6/2015.


Table 2: LPIs last 8 quarterly results

If we removed the gain on disposal of investment in equities - which yielded huge gain in QE30/6/2015 & QE31/12/2014 of RM39.2 million & RM59.9 million respectively- then the profit trend is more predictable. Another thing that's clearer is the net profit margin, which is steady at just under 20%. 


Chart 1: LPI's last 38 quarterly results

Valuation

LPI (closed at RM14.44 yesterday) is now trading at a PE of 14.4 times (based on last 4 quarters' EPS of 101 sen). At this PER, LPI is deemed fairly attractive.

However, if we excluded the exceptional gain on disposal of investment in QE30/6/2015 & QE31/12/2014), then LPI's last 4 quarters' EPS would drop from 101 sen to 71 sen. Its PER would rise from 14.4 times to 20.6 times. At this PER, LPI is deemed fairly valued.

Technical Outlook

LPI is in a long-term uptrend line with support at RM13.00. Immediate resistance is at the all-time high of RM15.00.


Chart 2: LPI's monthy chart as at Oct 8, 2015 (Source: ShareInvestor.com) 

Conclusion

Based on good financial performance, reasonable attractive valuation & positive technical outlook, LPI's rating is revised from HOLD to BUY.

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, LPI.