Uchitec rallied on thin volume

In end February, Uchitec announced its unaudited full year result for FYE31/12/2007. For FY2007, Uchitec reported a 24%-drop in its net profit to RM78.3 million on the back of a 15.0%-decline in turnover to RM156.9 million.

For QE31/12/2007, its net profit dropped 10.6% q-o-q or 18.9% y-o-y to RM16.7 million while its turnover was fairly stable at RM38.6 million vis-a-vis RM39.2 million for QE30/9/2007 or RM37.5 million for 31/12/2006. The company attributed its poorer performance to the appreciation of the Ringgit as its revenue was mostly in US Dollar. It has reported that it expects to grow its revenue in US Dollar in FY2008. The recent rebound in the US Dollar could be sign that the recovery in US Dollar may take place soon and this would be positive for Uchitec.



Uchitec share price has rallied since March 21st, from a low of RM1.75 to a high of RM2.35 as at 10.30 am today. This means that the share price, which rose on thin volume, has tested the steep downtrend line resistance at RM2.35. If the price could break above the downtrend line, Uchitec's technical outlook would change. Currently. the stock's immediate horizontal resistance & support are at RM2.40 & RM2.10-15, respectively.


Chart : Uchitec's daily chart as at April 8, 2008 (courtesy of Quickcharts)

Based on the thin volume accompanying the present rally, one would be hard pressed to make a case to buy Uchitec even when its share price could break above its downtrend line. On the other hand, Uchitec's current rally could be a selling opportunity, if the share price failed to overcome the downtrend line.