Friday, August 17, 2012

UMW- breaking above the RM10.00 psychological level

Results Update

For QE30/6/2012, UMW's net profit increased by 2% q-o-q or 70% y-o-y to RM224 million while revenue increased by 12% q-o-q or 31% y-o-y to RM4.14 billion. The improved bottom-line was attributed to higher profit contributions from UMW's automotive segment which recorded a profit of RM490 million as compared to RM371 million for QE31/3/2012. Profit contribution from equipment segment remained steady at RM57 million (an increase from RM54 million from QE31/3/2012) while profit contribution from oil & gas segment slipped from RM29 million to a mere RM2 million.

Table: UMW's last 8 quarterly results

Chart 1: UMW's last 21 quarterly results


UMW (at RM10.04) is now trading at a PE of 17.6 times (based on last 4 quarters' EPS of 56.93 sen). However, if we calculate the annualized EPS using the results for the last 2 quarters, then UMW's EPS could be 76 sen. On this basis, its PE would be lowered to 13.2 times. This would suggest that UMW could have further upside if it can command a PE of 14-15 times.

Technical Outlook

UMW is in an uptrend. It has just broken above the psychological resistance at RM10.00. This means that UMW can continue with its uptrend.

Chart 2: UMW's daily chart as at Aug 17, 2012_3.30pm (Source: Quickcharts)


Based on good financial performance, UMW is rated a good stock for long-term investment. The upside breakout above the psychological resistance at RM10.00 would mean that UMW could continue with its prior uptrend.

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