AMWAY: Attractive Enough for Long Term Investing

Result Update

For QE31/3/2021, Amway's net profit rose 371% q-o-q or 97% y-o-y to RM20 million while revenue rose 12% q-o-q or 51% y-o-y to RM354 million. Revenue was higher than the preceding quarter by due to stronger demand for nutrition and wellness products, home appliances and new customer segment namely Amway Privileged Customer (APC) program launched in January 2021. The Group’s profit before tax increased by 433% as compared to the preceding quarter due to higher sales volume and lower selling and administrative expenses.

Table: Amway's last 8 quarterly results


Graph: Amway's last 54 quarterly results

Financial Position

As at 31/3/2021, Amway's financial position is deemed healthy with current ratio at 1.4 times while total liabilities to total equity appeared high at 1.2 times. However, it has cash balance of RM162 million or about RM0.99 per share.

Valuation

Amway (closed at RM5.19 yesterday) is trading at a trailing PER of 15 times (based on last 4 quarters' EPS of 34.6 sen). At this PER, Amway is deemed fairly attractive. In addition, investors may take comfort in receiving a decent dividend yield of 5.3%.

Technical Outlook

Amway has dropped from a high of RM12.50 in 2013 to a recent of RM4.50 in Mar 2020 (during the selldown at the start of the pandemic).


Chart 1: Amway's monthly chart as at May 25, 2021 (Source: Malaysiastock.biz)

From the daily chart below, Amway has been rising slowly in an uptrend line (in blue) with support at RM5.20.

Chart 2: Amway's daily chart as at May 25, 2021 (Source: Malaysiastock.biz)

Conclusion

Based on decent financial performance, good financial position, attractive valuation & a constructive technical outlook after a long decline, Amway could be a good stock to consider for 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.

Selamat Hari Raya Aidilfitri

 I wish all my readers a safe and blessed Hari Raya Aidilfitri.

PBBANK: Quarterly Profits Soared

Result Update

For QE31/3/2021, PBBank's net profit rose 333% q-o-q or 15.1% y-o-y to RM1.530 billion while revenue was mix- up 2.3% q-o-q but down 8.8% y-o-y to RM5.03 billion. The improved performance on a q-o-q basis was mainly attributable to lower loan impairment allowance of RM358.1 million (+64.3%), higher net interest income and net income from Islamic banking business of RM137.6 million (+7.1%) and RM61.4 million (+16.5%) respectively, and higher net fee and commission income of RM52.9 million (+9.8 %). These were partially offset by lower other operating income of RM78.6 million and higher other operating expenses of RM36.1 million.


Table: PBBank's last 8 quarterly results

From the graph below, we can see that PBBank's profits & profit margins have reached the all-time high achieved in QE30/6/2011.


Graph: PBBank's last 61 quarterly results

Valuation

PBBank (closed at RM4.10 yesterday) is now trading at a PE of 15.7 times (based on last 4 quarters' EPS of 26.13 sen). At this PE multiple, PBBank is deemed fully valued. It pays a decent dividend yield of 3.2%.

Technical Outlook

PBBank has been rising in an irregular upward channel (see parallel blue lines in Chart 1). Immediate support is at the horizontal line at RM4.10 while immediate resistance is at the horizontal line at RM4.50. 

Chart 1: PBBank's daily chart as at May 11, 2021(Source: MalaysiaStock.biz)


Chart 2: PBBank's weekly chart as at May 11, 2021(Source: MalaysiaStock.biz)

Conclusion

Based on good financial performance and fair valuation, PBBank 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.