Friday, August 21, 2015

Uchitec: A Stock For The Patient Investor

Results Update

For QE30/6/2015, Uchitec's net profit increased by 20% q-o-q or 17% y-o-y to RM12 million while its turnover increased by 6% q-o-q or 17% y-o-y to RM27 million. The company explained that the improved profits was due to "increase in demand for the Group's products and services plus reduction in fair value loss on derivative financial instruments to RM0.4 million (March 31, 2015: RM2.7 million)". The fair value loss came from the foreign currency forward contracts, which the Group had entered into to sell US Dollar. These contracts amounted to USD14.3  million  at approximately RM3.5991:USD1.00 (as compared to USD15.0 million  at RM3.4411:USD1.0 as at March31,  2015).

Table 1: Uchitec's last 8 quarterly results

Chart 1: Uchitec's last 39 quarterly results


Uchitec (closed at RM1.46 yesterday) is now trading at a PE of 13 times (based on annualized EPS of 11.3 sen). After a prolonged period of painfully slow price gain, Uchitec has finally lost its title as a stock with high DY. Its DY now stands at 6.8%- good but nothing to write home about. At the present price, Uchitec is deemed fairly valued- yet delivering a better-than-average DY.

Technical Outlook

Uchitec is in a long-term "uptrend", with support at RM1.20-1.30. After it broke above the horizontal line at RM1.55, the stock's long-awaited upleg was thought to have begun. As the market sentiment has since turned decidedly gloomy, the launch was aborted. Everybody went home...

Chart 2: Uchitec's monthly chart as at Aug 20, 2015 (Source:


Based on fairly reasonable valuation, good financial performance and mildly positive technical breakout, Uchitec could be a good stock for long-term investment.

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Uchitec.

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