Results Update

Allianz has just announced its results for QE31/3/2010. Its net profit dropped by 61.5% q-o-q but increased by 14.5% y-o-y to RM23.2 million while turnover increased by 19.4% q-o-q or 28.2% y-o-y to RM626 million. The drop in the net profit on a q-o-q basis was partly due to Allianz's practice of valuing its Life Funds' liabilities at its financial year end, with surplus taken into its book in the 4th quarter. As a result, Allianz booked in a surplus of RM12 million from its Life Funds in QE31/12/2009. In addition, its profit for QE31/3/2010 was also impact by a lower underwriting results from its general insurance subsidiary.


Table 1: Allianz's last 10 quarterly results


Chart 1: Allianz's 17 quarterly results

Valuation

Allianz (closed at RM4.82 yesterday) is now trading at a PER of 6.1 times (based on last 4 quarters' EPS of 79 sen). At this PER multiple, Allianz is deemed very attractive.

Technical Outlook

Allianz has been in an uptrend since October 2009. Its uptrend line accelerated from SS to S1-S1. In the past 4 weeks, Allianz dropped to its 40-week SMA line support at RM4.82. If this support is broken, it may test its immediate uptrend line at RM4.45-50.


Chart 2: Allianz's week chart as at May 26, 2010 (Source: Tradesignum)

Conclusion

Based on good financial performance & attractive valuation, Allianz could be a good stock for long-term investment. However, after a strong rally and the current uncertainty in the overall market, one should be more circumspect about buying into any stock in a substantial manner.