Uchitec's top-line & bottom-line slid further

Uchitec has recently announced its results for 3Q2008 ended 30/9/2008. Its net profit dropped 22.3% q-o-q or 32.0% y-o-y to RM12.7 million, while its turnover dropped 20.4% q-o-q or 31.8% y-o-y to RM26.7 million. The reason for the drop in turnover & net profit was attributed to one of its "customer's logistics plan restructuring, which stems from energy-saving directive issued by Switzerland w.e.f. January 2010". This explanation was first given when it announced its financial results for 1Q2008 ended 31/3/2008.



Uchitec (closed at RM0.94 yesterday) is now trading at a PE of 5.5 times (based on last 4 quarters' EPS of 17 sen) or at a Price to Book of 1.9 times (based on NTA per share of RM0.49 as at 30/9/2008). At these multiples, Uchitec is attractively priced.

Uchitec is now holding at its horizontal line & psychological support of RM1.00. If this support failed, then Uchitec will slide to the RM0.50-60 horizontal support level. I believe the present support at RM0.90-1.00 should hold for now.


Chart: Uchitec's monthly chart as at Dec 1, 2008 (source: Quickcharts)

Despite the poorer financial performance, Uchitec is a stock worth tracking. Its valuation is quite attractive. The technical picture is not deteriorating since it found some support at the RM0.90-1.00 level. In the current environment, you can afford to wait for the financial performance to improve or the technical outlook to turn positive. Nevertheless, a slow accumulation of this stock at this stage may not be a bad idea.