Thursday, August 02, 2012

Multico- a favorable judgment but...

This morning, we read the news that explained Multico's sharp rally yesterday. The reason is that the company has won a judgment sum of RM44.19 million in the Kuala Lumpur High Court against 11 defendants, including its former directors. From the Star article:

The company will stand to record a contribution of about RM44.19mil to net profit after tax in its financial year ending July 31, 2013 from this court judgment.

“Subject to the execution of the judgment and on the full recovery of the judgment sum awarded to the company and its subsidiary, the financial effects of this judgment on the group (are a) contribution of 99.5 sen to earnings per share and (an) increase of 99.5 sen in net assets of the group,” it told Bursa Malaysia yesterday.
Winning the judgment is one thing. Getting paid is another matter. We should also consider how much of this positive news- even before the favorable judgment was awarded- has been factored into the price. My feeling is that we should take some profit from the recent sharp price run-up.

The chart below is for your guide. We can see that the strong resistance would be at the 2007 high of RM1.80 while the strong support should be at RM1.30. I feel the RM1.70-1.80 should be a good level to take profit while the support at RM1.30 could be a good level for a trading buy.

Chart: Multico's weekly chart as at August 1, 2012 (Source: Quickcharts)

For background of Multico, check out my earlier post in 2010.


David said...

Could you please comment on Timecom? Are there any potential on this stock? Thanks.

Alex Lu said...

Hi David

Timecom is a company with good potential. I expect this stock to do well in the long-term.

For now, it is trading sideway after a sharp rally from RM2.70 to RM3.65 in late May & Early June. This sideway trading will see the test of the horizontal support at RM3.25 & horizontal resistance at RM3.65. In the event, it breaks below the RM3.25 level, the psychological support at RM3.00 should kick in. That level is a strong support as it could well be the uptrend line for the stock.