Hiaptek- on the verge of breaking above its downtrend line

The Star reported that Hiap Teck Ventures Bhd, through its 55% owned subsidiary Eastern Steel Sdn Bhd "has entered into an engineering and procurement contract and a construction contract with China Shougang International Trade and Engineering Corp for the design, procurement and construction of the first phase of an integrated steel mill in Teluk Kalung, Kemaman, Terengganu."

"The contract value for the engineering and procurement contract is RM417.83mil, while the construction contract is RM232mil. This integrated steel mill will have an annual capacity of 0.7mil tonnes of steel while the completed integrated steel mill will have a total annual capacity of 3.5mil tonnes of steel. This project plant is expected to be completed by 2013".

It is also reported that Hiap Teck & China Shougang has entered into a supplemental agreement "whereby Hiap Teck will issue to China Shougang or its nominated affiliates 32.2 milllion Hiap Teck shares as placement shares, at an issue price to be agreed upon".

From the chart below, we can see that Hiap Teck is in a downtrend line, with resistance at RM1.15. This coincides with the horizontal line at RM1.15. If the stock can break above this resistance, the technical outlook could turn bullish. Its next resistance levels are at RM1.30 and then at RM1.50. As such, Hiap Teck is on the verge of a bullish breakout.

Chart: Hiaptek's weekly chart as at July 21, 2011 (Source: Quickcharts)