Wednesday, November 21, 2007

Uchitec may have peaked

Uchi Technologies Bhd ('Uchitec') is involved in the manufacture & sale of controller modules for consumer & industrial electrical & electronic appliances. Uchitec, which was listed in July 2000, has become one of the darling stocks among the investors due to its impressive financial performance & the steady rise in its share price.

In the past 4 quarters, its net profit seems to have hit a plateau. According to its latest quarterly results fro QE30/9/2007, Uchitec's net profit has dropped 13.4% q-o-q or 17.8% y-o-y to RM18.7 million while its turnover has also declined by 2.5% q-o-q or 5.3% y-o-y to RM39.2 million. The company attributed the decline in its net profit to the appreciation of Ringgit as well as changes in the product mix.

Based on the 9-mth performance, Uchitec is expected to register a small decline in its net profit for FY2007, which will break its profit track record, which shows a consistence growth since 2002. The group could recover from this small setback in FY2008 when its new plant in China is set to start operation.

Technical analysts may take a bearish view of Uchitec's recent share price decline. The share price seems to have peaked at RM3.40 & broke below its long-term uptrend line support of RM2.90 on November 2nd.

Chart: Uchitec's monthly chart as at November 20 (courtesy of Quickcharts)

Based on the technical SELL signal noted, it is advisable to avoid Uchitec for now.

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