Unico also has a bullish breakout

Unico-Desa Plantations Bhd ("Unico") is a medium-size plantation company whose share price has been stuck between RM0.48 & RM0.52 for the past 4 months. Its financial performance mirrors its share performance. From the Table below, you can see that the latest 4 quarterly net profit amounts to RM29.4 mil; an increase of only 3.7% from the preceding 4 quarterly net profit of RM28.4 mil. Turnover has in fact dropped 6.9% from RM192.6 mil to RM179.2 mil. As such, EPS has only inched up from 3.28 sen to 3.48 sen.







Based on yesterday (August 2)'s closing price of RM0.54, the share is now trading at PE of 15.4 times. At this multiple & with a dull outlook, Unico is deemed fairly valued. But, the share did a bullish breakout yesterday.

















Chart 1: Unico's daily chart as at August 2

















Chart 2: Unico's weekly chart as at August 2

From Chart 2 above, you can see that Unico has a strong resistance at RM0.53 level. It broke above this level with very big volume yesterday. Despite these observations, I am a bit apprehensive calling a BUY on Unico because its belated bullish breakout, in the sea of bullish plantation stocks, could well end up as a bull trap. So instead of buying immediately, let's watch it for another day to see whether, on pullback, it can hold above its strong resistance-turned-support level of RM0.53. Only if it can do so, would it be safe to buy into this stock. Target objective is RM0.60-0.65.