PJI is involved in property development as well as engineering activities for the civil, building, mechanical and electrical, infrastructure, power substations, transmission lines, water treatment plants, renewable energy, environment services and other related engineering works.

PJI has just broken above its strong horizontal resistance at RM0.11. It may test the next resistance at the horizontal line RM0.22. Before you get into this stock, consider the following:

1. PJI's financial performance has been very unexciting. For the 9-month ended 31/3/2010, it reported a net loss of RM3.8 million on turnover of RM59.7 million. It has however achieved a net profit of RM3.2 million on turnover of RM99.7 million last financial year (FY2009). In FY2008, it incurred a net loss of RM3.7 million on turnover of RM132 million.

2. Since its listing in 1999, PJI had lost 14 sen of its par value of 20 sen. To erase the accumulated losses from its books, PJI has proposed a capital reduction scheme (via a Par Value Reduction whereby its Paid-Up Share Capital of RM81,209,333 shall be reduced to RM40,604,667) & a recapitalization exercise (via a Rights Issue on the Basis of 2 Rights Shares Together with 3 Free Detachable Warrants for Every 4 PJI Shares Held After the Proposed Par Value Reduction at an Indicative Issue Price of RM0.11 per Rights Share). For more, go here.

I know that some investors get very excited about new warrant issues, share splits and bonus issues but these exercises do not add much value to the companies. While one can justify why Topglove has risen on the back of similar exercises (or, more appropriately, despite such exercises), I cannot see why investors should get excited about similar exercises undertaken by an under-performer like PJI.


Chart: PJI's weekly chart as at July 7, 2010_3.15 pm (Source: Quickcharts)

Based on the above, I would give PJI a miss despite what looks like a promising technical breakout.