Muda may have a bullish breakout

Technical Outlook

Muda broke to the upside of its ascending triangle at RM0.97 today. In addition, it broke above the psychological RM1.00 level. The next resistance is at RM1.20-1.40. See Chart 1 & 2 below.


Chart 1: Muda's weekly chart as at July 11, 2011 (Source: Quickcharts)



Chart 2: Muda's monthly chart as at July 1, 2011 (Source: Quickcharts)

Recent Financial Results

Muda's top-line has grown steadily over the past 2 years. Its bottom-line has been flattish. For QE31/3/2011, Muda's net profit dropped by 32% q-o-q or 9% y-o-y to RM7.5 million while its turnover was up 7% q-o-q or 21% y-o-y to RM262 million. The company attributed the lower net profit to adverse movement in USD-RM exchange rate & higher raw material cost.


Table: Muda's last 8 quarterly results



Chart 3: Muda's last 20 quarterly results

Valuation

Muda (at RM1.05 as at 2.55pm) is trading at a PE of 8.8 times (based on last 4 quarters' EPS of 11.82 sen). At this PE, Muda's upside potential may be limited. It could command a PE of 10 times.

Conclusion

Based on technical consideration, Muda could be a good trading BUY.