Integrated chemicals and lubricants distributor Samchem Holdings Bhd has been a regular on technical charts. Some two weeks ago, Samchem was said to be on an uptrend rebound after surpassing the 56 sen level on heightened trading volume. At that time, the stock was said to be heading towards 59 sen, which is the highest level since March 8, with the next resistance of 63 sen.

Indeed, the counter rose past the 63 sen level to close at 65 sen on Dec 27. The near-term resistance level is seen at 70 sen, followed by 75 sen. Investors who bought Samchem shares six months ago would be happy to see a 25% jump in value.

The counter was trading at a 52-week low of 47 sen but rose to touch a year high of 74 sen recently. Looking the share price movements in the past couple of days, the counter has seen a sharp upturn despite the absence of significant corporate development.

Financially, the company has been faring well. For the third quarter ended Sept 30, 2023, Samchem posted higher net profit of RM8.5 million versus RM6.5 million a year ago. This was despite seeing a marginally lower revenue of RM322.5 million against RM317.3 million.

However, for the nine-month period, the company saw a lower net profit of RM22.3 million compared with RM44.3 million a year ago while revenue slipped to RM854.2 million versus RM1 billion in its filings to Bursa Malaysia.

They say good things don’t last and investors should quickly take profit whenever possible. Interestingly, the company CEO has spoken in May about expanding its chemical businesses via M&A and he was in preliminary discussions with several companies that will complement its product reach.

But nothing has materialised so far. The CEO admitted it has been a rather challenging operating environment. Not only does he have to contend with challenges in Malaysia, he also needs to manage various business conditions in countries the company is operating in, including Singapore, Vietnam, Indonesia, Cambodia and Myanmar.

Besides chemicals and lubricants, Samchem has also expanded distribution of its products to a including automotive, construction, commodities, electronics and oil and gas. More often than not, investors should stay cautious and probably wait for a consistent pattern of growth.

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Here are the setup based on Daily Chart:

1. Moving into uptrend with gap up and high volume

2. Downbar high volume from resistance. Might pullback to 40MA