WTK may have a bullish breakout

WTK has just broken above its symmetrical triangle at RM0.80-82. It made an intra-day high of RM0.89 before profit-taking set in. As at 12.00 noon, WTK was trading at RM0.87.


Chart 1: WTK's daily chart as at 14/10/2009 (Source: Quickcharts)


Chart 2: WTK's daily chart as at 14/10/2009 (Source: Quickcharts)

Financial Results & Position

For FYE31/12/2008, WTK's net profit dropped 13.8% from RM59 million to RM51 million. This happened despite a 18.5%-increase in turnover from RM686 million to RM814 million.

For FYE31/12/2008, the timber division registered a turnover of RM679.3 million, representing an increase of 27.0% while its pre-tax profit decreased by 10.4% to RM62.8 million. The drop in the pre-tax profit is the result of a significant increase in production costs experienced during second and third quarter 2008. The average round log prices increased 3.6% whilst volume remained flat. At the same time, average plywood prices were higher by 11.4%, whilst sales volume increased by 43.4%.

The non-timber division registered a turnover of RM131.2 million, representing a decline of 11.8% while its pre-tax profit also reduced by RM3.2 million to RM1.9 million as compared to the corresponding period last year (RM5.1 million). The decrease in both turnover and pre-tax profit was mainly due to weakening demand in both domestic and export markets.

WTK's financial position is satisfactory with current ratio at 2.1 times & gearing ratio at only 0.23 times.



Conclusion

Based on technical bullish breakout, I believe WTK could be a good trading BUY.