Affin: Earnings Recovery Continues

Result Update

For QE31/12/2016, AFFIN's net profit rose 23% q-o-q or 76% y-o-y to RM171 million while net income rose 5% q-o-q or 14% y-o-y to RM528 million. The improved performance was mainly due to the increase in other operating income and Islamic banking income totaling of RM23.2 million, higher share of profits in associate of RM11.0 million and lower impairment loss on securities of RM12.5 million. The allowance for loan impairment and overhead expenses however increased by RM10.9 million and RM6.3 million respectively for the quarter under review.


Table: AFFIN's last 8 quarterly result


Graph: AFFIN's last 9 quarterly result

Valuation

AFFIN (closed at RM2.48 yesterday) is now trading at a PER of 8.6x (based on last 4 quarters' EPS of 29.03 sen). At this PER, AFFIN is deemed fairly attractive.

Technical Outlook

AFFIN is now on the early stage of a slow recovery. Its MACD has gone above the zero line. +DMI is above the -DMI and ADX has risen significantly. The position of +DMI vis-a-vis -DMI indicates uptrend and ADX indicates strong uptrend momentum.


Chart 1: AFFIN's weekly chart as at Feb 28, 2017 (Source: ShareInvestor)

From the monthly chart below, we can see that AFFIN has begun its recovery from the "baseline" at RM2.00-2.10. 


Chart 2: AFFIN's monthly chart as at Feb 28, 2017 (Source: ShareInvestor)
  
Conclusion

Based on recovery in earning, undemanding valuation and positive technical outlook, AFFIN is a good stock to consider for a recovery play.

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.