UEMLand- a double whammy!!

In the market, our stock occasionally enjoys a boost from good news or suffers a knock from bad news. Not very often does our stock enjoy or suffer a double dosage of good news or bad news. Today, UEMLand suffered a double whammy.

In the morning, we have a newspaper report that the Sales and Purchase Agreement (SPA) between UEMLand and Damac Properties Sdn Bhd for the sale of approximately 17.416 hectares in Puteri Harbour, Nusajaya has lapsed. The sale of the land was for RM396 million cash. More than the lost revenue, the termination of the SPA represents a serious setback to the planned development of Nusajaya.

While investors were digesting this news, another blow came in the afternoon. The Sultan of Johor was reported to be not in favor of the proposed third bridge linking Malaysia and Singapore (go here). This news impact all property-related stocks with substantial exposure to Johor, especially UEMLand, since no one is more closely tied to property development in the state of Johor than UEMLand.

From the chart below, we can see that UEMLand may find support at its 50-day SMA line which coincides with the support of the immediate uptrend line at RM1.45. I expect some support from the horizontal line at RM1.50.


Chart 1: UEMland's daily chart as at 18/6/2009 (Source: Quickcharts)

A few weeks back, a friend asked me what I thought the upper limit of the rally in UEMLand would be. I told her that UEMLand might follow the footsteps of its predecessor, UEMWorld which in turn followed the footsteps of its predecessor, Renong. What I've meant was that UEMland would slowly rise to the RM4.00 level over a period of a few years, but the present rally would probably top off at RM2.00. I do not have the chart of Renong any longer, but I have combined the previous chart of UEMWorld & the current chart of UEMLand. The just-concluded rally in UEMLand would be similar to the run-up in UEMWorld from Feb to May 2006 where the share price rose from RM0.40 to RM2.00 (denoted as 'A'). Thereafter, UEMland would consolidate for many months (maybe even a year or two) like what UEMWorld did from May 2006 to Feb 2007 (denoted as 'B'). Then, a big rally to RM4.00, like what happened in UEMWorld from Feb to May 2007 (denoted as 'C'). The timeline will vary according to corporate development & economic conditions.


Chart 2: The combined daily chart of UEMWorld (up to its delisting on May 25, 2007) & UEMLand as at 18/6/2009(Source: Tradesignum)

So, don't write off UEMLand. It may return with a vengeance... one fine day.