May 2007 Financial News

AMBL Releases First Quarter Results

May 25, 2007

Results for the First Quarter Ended March 31, 2007

For the First Quarter Ended March 31, 2007, Ansa Merchant Bank Limited (AMBL) reported Earnings Per Share (EPS) of 42 cents. This was up by an outstanding 31.25 per cent or 10 cents on the comparable quarter in FY06.

Total Income amounted to $140.89 million for Q107 and was up by a healthy 18.65 per cent or $22.15 million on Q106. The Chairman has stated that Revenue growth for both Banking and Insurance operations remain robust, with the Banking operations up 56 per cent on the corresponding period, which was generated primarily from the investment portfolio. Total Expenses was up by a smaller margin of 9.29 per cent or $8.13 million to end the quarter at $95.60 million. As a result, Operating Profit for the period stood at $45.29 million, a significant increase of 44.85 per cent on the same period last financial year.

The Effective Tax Rate for Q107 was 21.00 per cent compared to a Tax Rate of 12.96 per cent for Q106. Thus, Profit After Taxation was $35.77 million compared to $27.21 million in the corresponding quarter of fiscal 2006- an increase of 31.46 per cent.

The shares of AMBL are currently trading at a price of $20.78. In light of these commendable results we are revising our forecasted EPS for FY07 to $2.15. At this revised forecast and the current price, these shares are trading at an attractive multiple of 9.67 times. Additionally, using a multiple of 13 times and the forecasted EPS of $2.15, this share has an expected return of approximately 35 per cent on the current price or a target price of $27.95. Based on these fundamentals we would recommend a BUY on this share.

However, while this buying opportunity may be very attractive, we continue to caution investors that the shares of AMBL are very tightly held. ANSA McAL Limited holds approximately 82 per cent of the share capital of this Company and hence there is limited availability and liquidity of these shares on the market.


Gia Singh
WISE Equity Research Team