UMW is a solid performer, with 4 main businesses, i.e. Automotive, Equipment, Oil & Gas and Manufacturing & Engineering:
1) Through joint ventures with Toyota and Perodua, UMW assembles, markets and distributes some of Malaysia’s most popular models of passenger cars and commercial vehicles.
2) From earth-moving and power generation to marine engine, material handling and compressed air, UMW supplies the brand-name equipment that keeps industry moving.
3) Complimenting up-stream Oil & Gas industry activities around the world with tubular goods and oil field supplies, plus a full range of support services from site operations to offshore rig development.
4) Innovative components, trusted brands, and specialized equipment for OEM and replacement automotive markets, transportation facilities and the petro-chemical industry.
Recent Financial results
For FYE Dec2008, UMW's net profit increased by 20% from RM469 million to RM562 million on the back of a 8%-increase in turnover from RM9.976 billion to RM12.798 billion. EPS increased by 16.4% from 44.62 sen to 51.95 sen.
For 4Q2008, its revenue of RM2,918.3 million was lower than the RM3,326.2 million recorded for 3Q2008 by RM407.9 million or 12.3%. As a result, its pre-tax profit of RM269.9 million was also lower than the RM353.8 million achieved in 3Q2008 by RM83.9 million or 23.7%. Lower vehicle and equipment sales in 4Q2008 contributed to the drop in revenue.
Valuation
UMW (closed at RM5.90 yesterday) is now trading at a trailing PE of 11.3 times. If the Malaysian & other regional economies can recover from the current slowdown, there is a possibility that UMW's earning could improve. Thus, the stock's potential future earning could be higher & the stock could be presently trading at an attractive future PE multiple.
Technical Outlook
From the weekly chart (Chart 1), we can see that UMW has broken above its medium-term downtrend line at RM5.30 in January this year. Its weekly MACD, which has hooked up, is now rising well above the 'zero' line- signaling the start of a new uptrend.
Chart 1: UMW's weekly chart as at 12/5/2009 (Source: Quickcharts)
The monthly MACD looks set to do a positive crossover(see Chart 2). When this happened, we would have a confirmation of a bottom for UMW.
Chart 2: UMW's monthly chart as at 12/5/2009 (Source: Quickcharts)
Conclusion
Based on steady financial performance and improving technical outlook, UMW could be a good stock for long-term investment.
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