– Uchi Technologies (UCHI MK; RM1.42, SELL) – Struggling to hold above its 50-day SMA.
– RCE Capital (RCE MK; RM0.63, BUY) – Potential breakout.
– Melewar Industrial Group (MIG MK; RM0.655, SELL) – Strong resistance lies ahead.
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Uchi Technologies (UCHI MK; RM1.42) – SELL
FY10P/E: 11.8x, P/BV: 3.2x
• From the daily chart, it seems that Uchi is hanging by a thread. Recent pullback dragged prices below the wedge support and it is now struggling to hold above its 50-day SMA. A crack down would have a negative implication as prices may move towards RM1.35 and RM1.27 next.
• Technical landscape is turning weaker now. MACD continues to drift lower while RSI is below the 50-mark.
• Although we do not discount the possibility of a technical rebound, we think sustainability is a concern here. Hence, any bounce towards the RM1.47 resistance trend line is an opportunity to take profit. To negate the bearish trend, it needs to inch past RM1.50.
Uchi Technologies Berhad is an investment holding company. Through its subsidiaries, it designs, researches, develops, and manufactures miniature data terminals, fuzzy logic controllers, and control modules. Uchi Technologies also assembles electrical components onto printed circuit boards and trades complete electric module and saturated paper of PCB lamination.
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RCE Capital (RCE MK; RM0.63) – BUY
FY10P/E: 6.2x, P/BV: 1.3x
• RCE has been consolidating in a triangle pattern over the past few weeks. As trend lines converge, prices could swing either way, but we believe an upside breakout is more likely to happen. Improving technical landscape coupled with a favourable risk/return ratio point to more upside.
• MACD is hovering in the negative zone but momentum is picking up. A positive crossover would likely push prices above the trend line resistance. Meanwhile, RSI has also hooked upward.
• Risk takers may start to accumulate but remember to place a stop at below RM0.615. Once the trend line is taken out, next upside targets are RM0.665 and RM0.70.
RCE Capital Berhad is an investment holding company which provides management services. Through its subsidiaries, the company invests in property, provides information technology, financial administrative, loan financing, broadcasting and advertising media services. RCE Capital is also involved in general trading, licensing and merchandising activities.
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Melewar Industrial Group (MIG MK; RM0.655) – SELL
FY10P/E: N/A, P/BV: 0.3x
• Despite early breakout, Melewar failed to hold above the resistance trend line, suggesting that strong resistance lies ahead. If another black candle is seen today, most probably its recent uptrend is at its tail-end. Until it breaches the RM0.70 level, we would prefer to stick with the bears’ camp.
• MACD is still rising but RSI has turned southbound. Choppier trading can be expected over the next few days as the candles try to swing past the resistance trend line at RM0.665.
• Sell into strength is probably the best option here. Our bearish stance will change if RM0.70 is taken out. On the other hand, continuous selldown should bring Melewar closer to its key SMAs at RM0.605-RM0.61, and possibly even RM0.575.
Melewar Industrial Group Berhad manufactures and trades steel pipes and tubes. The company, through its subsidiaries, manufactures and trades cold rolled steel sheets in coils, provides engineering and management, investment holding, and engineering and technical consultancy services.
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