LPI: Trading at Attractive Valuation

Result Update

For QE31/12/2020, LPI's net profit rose by 10.5% q-o-q or 10.0% y-o-y to RM95 million while revenue rose 6.7% q-o-q or 5.8% y-o-y to RM422 million. Profit before tax grew by 6.9% y-o-y to RM123.3 million from RM115.3 million in the corresponding quarter in 2019. The growth in PBT was contributed by profit from the general insurance segment, which increased by 7.9% to RM124.5 million from RM115.4 million, as well underwriting profit, which grew by 16.3% to RM112.7 million from RM96.9 million previously mainly contributed by the lower net claims incurred and the growth in net earned premium as compared to corresponding quarter in 2019. The investment holding segment recorded higher loss before tax of RM1.2 million as compared to RM0.1 million in the corresponding quarter in 2019 mainly due to lower interest income received and higher management expenses during the current quarter.

 
Table: LPIs last 8 quarterly results


Graph: LPI's last 56 quarterly results

Valuation

LPI (closed at RM13.46 yesterday) is now trading at a trailing PE of 15.9 times (based on last 4 quarters' EPS of 84.52 sen). LPI paid out dividend totaling 72 sen during the period. This means LPI has a decent DY of 5.3%. Based on these 2 valuation models, LPI is deemed fairly attractive.

Technical Outlook

From Chart 1, we can see LPI has been moving in a saucer formation around RM13.00-14.00 in the past 7 months. From Chart 2, we can see that the monthly MACD is poised to hook up. When that happens, the technical outlook will turn positive for the stock.


Chart 1: LPI's daily chart as at Feb 3, 2021 (Source: Malaysiastock.biz)


Chart 2: LPI's monthly chart as at Feb 3, 2021 (Source: Malaysiastock.biz)

 Conclusion

Based on good financial performance, fair valuation & mildly positive technical outlook, LPI is still a good stock for long-term investment. 

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.