Hiaptek broke above its short-term downtrend line

Hiaptek is involved in the manufacture of steel pipes & other related products as well as in the distribution of hardware and building materials.

Its recent financial results for QE31/1/2008 shows that the group's net profit has recovered from the slump in the past 2 quarters, i.e. QE31/10/2007 & QE31/7/2007. Its net profit has increased by 73.8% q-o-q to RM22.9 million on a 42.8%-increase in turnover of RM430.6 million. When compared to the same quarter last year, net profit was marginally lower while turnover was up 25.1% from RM301.5 million, previously.



If Hiaptek can maintain its earning for the next few quarters like that of QE31/1/2008, it may earn 28 sen per share. At the share price of RM1.72 (its closing price at the end of today's morning session), Hiaptek is now trading at a PE of 5.9 times. At this multiple, Hiaptek is deemed inexpensive.

From Chart 1 below, we can see that Hiaptek has just broken above its short-term downtrend line of RM1.63-65 level. Hiaptek is still in a long-term uptrend line, with support at RM1.55-57. It needs to overcome its medium-term downtrend line resistance at RM1.82-84, before the upleg can really pick up the pace (see Chart 2 below).


Chart 1: Hiaptek's daily chart as at April 22, 2008 (courtesy of Quickcharts)



Chart 2: Hiaptek's weekly chart as at April 22, 2008 (courtesy of Quickcharts)

Based on attractive valuation and technical breakout, Hiaptek could be a good BUY at the present price level.

Note: I had called a BUY on this stock in September 2006 (go here).