Last Friday, Unisem broke above the intermediate downtrend line, RR at RM2.46. It rallied to a high of RM2.60- 10 sen short of its April 2015 high of RM2.70- and closed at RM2.54. The price breakout- coupled with MACD above the zero line and +DMI above -DMI - could signal the continuation of Unisem's uptrend after a pause of more than 1 year. (Note: Momentum is still lacking as revealed by ADXR below 20.)
Chart 1: Unisem's weekly chart as at July 8, 2016 (Source: ShareInvestor.com)
If the breakout gathers enough momentum, Unisem's next upleg could go as far as RM5.00.
Chart 2: Unisem's monthly chart as at July 8, 2016 (Source: ShareInvestor.com)
Table: Unisem's last 8 quarterly results
Chart 3: Unisem's last 46 quarterly results
Unisem (closed at RM2.54 last Friday) is now trading at a PE of 11 times (based on annualized FY14E EPS of 23.05 sen). At this multiple, Unisem - a cyclical stock - is deemed fairly valued.
(Note: The major shareholder of Unisem, John Chia has been buying steadily for the past 8-9 months. Since January, John Chia has added 6 million shares to his direct & indirect holding; raising his total shareholding from 24.9% to 25.8%. For more, go to Unisem's Changes in Shareholding.)
Based on improving technical outlook, I revise my rating for Unisem from SELL INTO STRENGTH to a HOLD. Please exercise careful discretion if you choose to trade the breakout as the stock could be at its peak earning now.
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Unisem.