UCHITEC had released their Annual Report on 19 April 2016. Indeed there are surprises in the Top 30 Shareholders. This post will be an additional to the previous UCHITEC post. The theme of the Annual Report 2015 "Flourishing from Strength to Strength" with pictures of ripe and ready to harvest paddy. Maybe the management is hinting the share price is going to turn to goldish yellow~ haha. Let's dig in~

The best part about UCHITEC is its revenue and net profit is consistently high. The average of net profit margin and EPS of 44.66% and 11.94 cents respectively for 5 years. The dividend yield for UCHITEC is even higher than the FD rate, which is 6.09%, which we can see a lot of local fund houses and foreign fund houses investing in it. In its latest Annual Report 2015, the management maintains the dividend allocation of minimum 70% of the net profit, the highest i encounter so far[1]. 

Another highlight will be its high net cash per share. The net cash per share is 0.4592, almost 30% from the closing price on 25 April of 1.73. 83% of its trade receivables are denominated in USD (RM8,57 mil) vs the 60% of its trade payables denominated in USD (RM13.66 mil). Eventhough the USD trade payables is higher than USD trade receivables, its short term deposits is enough to cover the shortage of RM5.09 mil as their USD short term deposits totals up to RM20.11 mil. Recently our Ringgit is showing some strength, which will ease the burden too. 

By comparing 2014 and 2015, the revenue from Europe and US had increased 19% and 52% respectively. UCHITEC is successful at attracting, retaining and developing their employees. They had been actively offering Employee Share Option Scheme (ESOS) as a token of gratitude to their employees for their tireless efforts for the company. At least they are taking the welfare of their staffs, compared to the market nowadays whereby a lot of people are losing their job.

ValueCap Sdn Bhd actually emerges as their top 30 shareholders, alongside with other local and international fund houses. Look at the list below, you will see more than 20 fund houses, for example, Lembaga Tabung Haji, Public Islamic Opportunities Fund, Amanah Saham Bumiputera, Manulife Investment Fund etc etc.

Still remember Valuecap Sdn Bhd? In 2015, when our PM announced that RM20 bil will be injected to support undervalued stocks. Truthfully we do not know how Valuecap define the undervalued stocks, but i am quite sure UCHITEC is in their list. UCHITEC had a high dividend policy with high cash balances to weather the stormy crisis. When our PM announced on the news of Valuecap, our FBMKLCI bounced up and closed at 36 points, regaining the confidence from the shareholders in the market. Valuecap Sdn Bhd, which was set up to support underperforming shares, had proven to be effective in stabilising the equity market. I strongly believe Valuecap Sdn Bhd will appear in some other counters. You can try to read some extra information on Valuecap Sdn Bhd.

When we look at the daily chart, it formed a golden triangle and breakout with a gap up on 19 April 2016, on the day it releases it Annual Report. The bullish engulfing is a bullish signal with high volume. If the gap is not been closed, then the bullish signal remains. The volumes are getting active these few weeks. And i assure UCHITEC will be more active if more people notice the emergence of Valuecap and the moment its bonus issue being approved. The share price actually gapped up on  24 February 2016 when UCHITEC announced the bonus issue of 1 for every 10 shares hold. Eventhough it is not as exciting, but still, it is offering 6 cents of dividend ex on 28 June 2016. 

I had drawn 2 resistances and 1 supports. If the share price can maintain above 1.73 for more than 5 days, i will assume that it is a successful breakout and will aim for the next target price, which is 1.84. However, do remember to cut loss. My support is drawn at 1.63. The RRR is not so attractive, with 1 portion of risk vs 1 portion of reward, considering the price bought in is 1.73. Do take note UCHITEC will be announcing its Q1 result in next month May.

Did U-CHI-TEC that *Valuecap* coming?

Let's Ride the Wind and Gainvest

Gainvestor 10sai

26 April 2016

12.480am

Sources:

[1]: UCHITEC Annual Report 2015: http://www.bursamalaysia.com/market/listed-companies/company-announcements/5061609

[2] http://www.thestar.com.my/business/business-news/2015/09/15/valuecap-boosts-market/