For QE30/6/2010, UMW's net profit increased by 59% q-o-q or 167% y-o-y to RM212 million, while turnover increased by 8% q-o-q or 27% y-o-y to RM3.282 billion. The improvement in turnover was attributable to higher sales of Toyota vehicles as well as industrial & heavy equipment. Bottom-line has improved in line with better sales as well as improved profit amrgin due to favorable forex movement & lower losses incurred by overseas associate.
Table: UMW's last 8 quarterly results
Chart 1: UMW's last 13 quarterly results
Valuation
UMW (closed at RM6.43 last Friday) is now trading at a trailing PER of 12.6 times (based on last 4 quarters' EPS of 51 sen). At its current rate of improvement in earning, UMW is trading at a fair multiple to its earning. Assuming a PER of 15 times, UMW's fair value could be RM7.65.
Technical Outlook
UMW has broken above its strong horizontal resistance at RM6.35. Its next resistance is at the horizontal lines of RM6.70 & RM6.80. The MACD & DMI have yet to turn up to signal the continuation of UMW's prior uptrend.
Chart 2: UMW's weekly chart as at Aug 20, 2010 (Source: Quickcharts)
Conclusion
Based on good financial performance, UMW could be a medium-term investment.
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