KUALA LUMPUR (Jan 29): Top gainer LPI Capital Bhd rose as much as RM2.78 or 15% after the insurer reported fourth quarter profit more than doubled from a year earlier, and proposed a dividend, and bonus share issue to reward shareholders.
LPI (fundamental: 1.7; valuation: 0.35) rose to its highest so far today at RM21.28 before reducing gains. The stock was traded at RM20.68 at 10.09am with 94,400 shares done.
Yesterday, LPI said net profit jumped 123% to RM117.06 million in the fourth quarter ended December 31, 2014 (4QFY14) from RM52.39 million a year earlier. Revenue was higher at RM299.17 million versus RM294.65 million.
Full-year net profit climbed to RM283.02 million from RM201.44 million a year earlier while revenue was higher at RM1.17 billion versus RM1.12 billion.
LPI plans to pay a dividend of 55 sen a share in 4QFY14, bringing full-year dividends to 75 sen. The company also proposed a bonus issue of new shares on the basis of one bonus unit for every two existing shares held.
Today, analysts, however, said they were mindful of the high base in LPI's FY14 profit, which could lead to lower profitability in current FY15.
Kenanga Investment Bank Bhd analyst Kelly Tan said the research firm downgraded its earnings forecast for LPI, besides the recommendation and target price (TP) for its shares.
"Considering the high FY14 base following the PBBANK (Public Bank Bhd) shares sale and resultant lower investment income moving forward, profitability could also register a decline in FY15.
"We adjust downwards our FY15 earnings estimate (-7.5%), after imputing a slower growth in premiums underwritten, and lower investment income from the group’s reduced stake in PBBANK," Tan said.
Tan said Kenanga downgraded its call for LPI shares to "market perform" with a lower TP of RM19 from RM19.10 previously.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)