AMBANK: Testing Its Downtrend Line

Results Update

AMBANK's result for QE31/12/2016 (3Q17) was released on February 24. That quarter saw AMBANK's net profit dropped 15.4% q-o-q but rose 4.3% y-o-y to RM313 million. Revenue dropped 5.8% q-o-q or 6.5% y-o-y to RM1978 million.


Table: AMBANK's last 8 quarterly results

PBT dropped q-o-q mainly due to lower net income from Islamic Banking business (RM8.5 million), other operating income (RM122.3 million) and, lower recoveries of RM14.4 million.

This was partially offset by higher net interest income (RM21.4 million), share in results of associates & joint ventures (RM9.4 million), higher writeback for impairment on loans, advances and financing (RM41.4 million), lower other operating expenses (RM6.6 million) and higher writeback of provision for commitments and contingencies (RM3.9 million).

Graph 1: AMBANK's last 22 quarterly results

Notwithstanding the dip in its earnings for QE31/12/2016, AMBANK's annualized earning for FY2017 is expected to be slightly higher than FY2016.


Graph 2: AMBANK's last 12 yearly results

Valuation

AMBANK (closed at RM4.99 yesterday) is now trading at a trailing PER of 11.9x (based on last 4 quarters' EPS of 42 sen). At this PER, AMBANK is deemed fairly valued.

Technical Outlook

AMBANK is now testing its intermediate downtrend line, RR at RM5.00. If it can break above this line, AMBANK could begin its next upleg.


Chart 1: AMBANK's weekly chart as at Mar 7, 2017 (Source: MalaysiaStock.Biz)

AMBANK dropped from a high of RM8.00 in 2013 to a recent low of RM4.00. It tested its long-term uptrend line support at RM4.00 before recovery.

  
Chart 2: AMBANK's monthly chart as at Mar 7, 2017 (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance & tentative signs of earning recovery, AMBANK could be a good stock 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.