MBSB: Another disappointing quarter

Result Update

For QE30/9/2015, MBSB's net profit plunged by 34% q-o-q or 67% y-o-y to RM63.5 million while revenue was unchanged q-o-q but rose 13% y-o-y to R768 million. The drop in NP was mainly due to higher allowances for impairment losses on loans, advances and financing.


Table: MBSB's last 8 quarterly results

A closer look at the chart below reveals that MBSB's bottom-line continued to slide even though top-line increased. This is due to the continued decline in its profit margin- mainly due to higher allowances for impairment losses.


Chart 1: MBSB's last 45 quarterly results

Valuation

MBSB (at RM1.69 yesterday) is now trading at a trailing PER of 6.8 times (based on the annualized EPS of 24.8 sen). However, if MBSB's performance going forward mirrors those of the last 3 quarters, then its full-year EPS would be about 13.6 sen and its PER would rise to 12.4 times.  At this PER, MBSB is fully valued.

(Note: MBSB's net profit for QE31/12/2014 rose due to the recognition of deferred tax in relation to origination & reversal of temporary differences.)

Technical Outlook

MBSB is in a downward line, with resistance at RM1.80. MBSB's share price movement for the past 1 year is confined within an irregular downward channel.

 
Chart 2: MBSB's weekly chart as at Nov 13, 2015 (Source: ShareInvestor.com)

MBSB's long-term share price movement seems to be within a curving upward channel. It tested the lower line at RM1.30 & rebounded. With the latest quarterly result, I expect the share price to slide towards the lower line again. Support can appear at RM1.50, RM1.40 & RM1.30.

 
Chart 3: MBSB's monthly chart as at Nov 13, 2015 (Source: ShareInvestor.com)

Conclusion

Based on poorer financial performance, tougher operating environment & bearish technical outlook, I maintain the rating of REDUCE for 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.