• Share prices staged a 4.5% relief rally from a 6-year low of RM0.995. UEMS share prices tumbled from YTD high of RM1.44 (27 Feb) to a low of RM0.995 (29 May) before closing at RM1.04 yesterday as investors rebalanced their portfolios following its exclusion from the MSCI index.
• The selldown was also compounded by a weak 1QFY15 results and fears of rising property glut and bearish sentiment in Johor. However, bargain hunting emerged after the selling climax of 108.5m was transacted on 29 May, the highest since its debut in Nov 2008.
• At RM1.04, UEMS is only trading at 0.74x P/B, 61% below its 5-year average of 1.9x. Current price is also at 34% and 29% discounts to HLIB and Bloomberg target prices of RM1.58 and RM1.47, respectively.
• Poised for further upside amid Tweezers bottom pattern and bottoming up indicators. The “Tweezers Bottom” candles ticks on daily and weekly charts coupled with bottoming up indicators suggest potential reversal of downtrend, after a brief sideways consolidation. A decisive breakout above RM1.10 (23.6% FR) will spur prices higher to retest RM1.16 (38.2% FR). Long term target is RM1.21 (30-d SMA and 50% FR). Major supports are situated at RM1.01 (hourly lower Bollinger band) and RM0.995. Cut loss below RM0.96 (daily lower Bollinger band).

Source: Hong Leong Investment Bank Research - 5 Jun 2015