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.

LPI: Steady Earnings Continued

Result Update

For QE30/6/2017, LPI's net profit dropped 3.5% q-o-q or 68% y-o-y to RM68 million while revenue rose 1.5% q-o-q or 4.0% y-o-y to RM353 million. PBT rose marginally q-o-q due to better underwriting experience, primarily driven by 18.6% growth in net earned premium income. PBT dropped 61.6% y-o-y mainly due to realized gain of RM150.4 million on  disposal of investment in quoted equities.


Table 1: LPIs last 8 quarterly results

For the past 2 years, LPI's earnings had been erratic due to realized gain from the disposal of quoted securities, mainly PBBank shares. I have presented below, the reported & adjusted earnings. We can see that bottom-line is rising in a steady manner.


Graph: LPI's last 46 quarterly results

Valuation

LPI (closed at RM18.60 yesterday) is now trading at a trailing PE of 20.7times (based on last 4 quarters' EPS of 89.72 sen which is substantially free from gain from sale of equity investment). LPI paid out dividend totaling 82 sen during the period. This means LPI has a decent DY of 4.4%.

Technical Outlook

LPI is in a long-term uptrend, with support from the 10-month SMA line at RM17.00.


Chart: LPI's monthly chart as at July 10, 2017 (Source: ShareInvestor.com)

 Conclusion

Based on good financial performance, fair valuation & positive technical outlook, LPI is still a good stock for long-term investment. I maintain my rating as BUY ON WEAKNESS at the 10-month SMA line at RM17.00.

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.

LPI: Bumper Profit from Sale of PBBank Shares

Result Update

For QE30/6/2016, LPI's net profit rose by 225% q-o-q or 148% y-o-y to RM213 million while revenue rose 6% q-o-q or 11% y-o-y to RM339 million. Profits increased substantially due  to both realized  gain  of RM150.4 million on  disposal  of  investment  in  quoted  equities as  well  as  better  underwriting experience.


Table 1: LPIs last 8 quarterly results

For the past 2 years, LPI's earnings had been erratic due to realized gain from the disposal of quoted securities, mainly PBBank shares. I have presented below, the unadjusted (in pink) & adjusted earnings (in yellow) to show the performance of the company. The adjusted earnings exclude the gain on disposal of investment in equities - which yielded huge gain in QE30/6/2016, QE30/6/2015 & QE31/12/2014 of RM150.4 million, RM39.2 million & RM59.9 million respectively. After the adjustment, we can see that LPI's net profit margin is steady at around 20%. 


Chart 1: LPI's last 42 quarterly results

From the increased earnings, LPI has increased its dividend payment gradually since 2014. Based on dividend of 75 sen in the past 4 quarters, LPI's dividend yield is about 4.6%. With its holding of 42.5 million PBBank shares today (valued at RM811 million), LPI can continue to book in the unrealized profit of this investment and keep up its dividend payment. 


Chart 2: LPI's dividend for last 42 quarterly results


Table 2: LPI's holding of PBBank shares
 
Valuation

LPI (closed at RM16.14 yesterday) is now trading at a trailing PE of 12 times (based on last 4 quarters' EPS of 137.38 sen) or 20 times (based on last 4 quarters' EPS [excl. gains on disposal of quoted shares] of 81 sen). Compared to the adjusted earnings growth of 19% for the last 4 quarters, the adjusted PER of 20 times will give a PEG ratio of 1.05 times. Thus LPI appears to be fairly valued.

Technical Outlook

LPI is in a long-term uptrend, with support from the 10-month SMA line at RM15.50.


Chart 3: LPI's monthly chart as at July 11, 2016 (Source: ShareInvestor.com)

 Conclusion

Based on good financial performance, fair valuation & positive technical outlook, LPI is still a good stock for long-term investment. Rating downgraded one notch to BUY ON WEAKNESS.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, LPI.