MBSB: Earnings Improved Again sequentially

Result Update

For QE30/6/2016, MBSB's net profit increased 81% q-o-q but dropped 26% y-o-y to RM63 million while revenue was unchanged q-o-q but rose 6% y-o-y to RM813 million. The q-o-q increase in PBT was mainly due to lower 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 continues to inch higher. This could signal the end of the provisioning exercise.


Chart 1: MBSB's last 48 quarterly results

Valuation

MBSB (at RM0.92 today) is now trading at a trailing PER of 25 times (based on the annualized EPS of 3.67 sen). A better indication of MBSB's valuation at this point of time would be its Price to Book ratio. The PBR stood at an undemanding 0.53x.

Technical Outlook

MBSB went in a tear when it appeared that Chua Ma Yu had increased his stake in MBSB from 6% to 9% (here). And, why not! MBSB's Rights Issue was attractively priced and any investor worth his salt should have bought into the stock. This was highlighted in my post in June (here).

From the chart below, we can see that MBSB has broken above its intermediate downtrend line, RR at RM0.86-0.87. Its immediate resistance is at RM0.92-0.93.


Chart 2: MBSB's weekly chart as at Aug 8, 2016_4.30pm (Source: ShareInvestor.com)

Conclusion

Based on imporved financial performance, better financial position & bullish technical outlook, I maintain my rating of MBSB as a long-term BUY.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.