TienWah poised to break out?

TienWah has just announced its results for 1Q2009 ended 31/3/2009. Its turnover increased by 16.6% q-o-q or 112% y-o-y to RM75.3 million. Net profit increased by 57% from RM3.4 million in 1Q2008 to RM5.4 million in 1Q2009, but dropped by 21.5% when compared to 4Q2008 (of RM6.9 million). The latter was attributable to lower margin due to greater competition.



TienWah (closed at RM1.54 yesterday) is now trading at a trailing PE of 5 times (based on last 4 quarters' EPS of 30 sen). With good prospect for steady growth ahead, TienWah's present PE multiple is deemed undemanding.

Technically speaking, TienWah's share price has been moving sideway in the past 3 years, at the price range of RM1.15-1.60. A "downtrend line" drawn from its high of RM2.04 in February 2004 still act as a resistance, capping its upside move. So, a breakout above RM1.60 could signal the uptrend for TienWah.

Chart: TienWah's weekly chart as at 7/5/2009 (Source: Quickcharts)

Based on attractive valuation, TienWah is a good stock for long-term investment. If it can break above the RM1.60 convincingly, it could even be a trading BUY.