UNIMECH: Poised for Recovery14th March 2019
Historical Financial Performance
In FY2018, Unimech’s revenue rose 12% while pre-tax profit rose 63%.
Graph 1: Unimech’s last 19 yearly results
The improved performance was due to better sales & profit contribution from two segments; Valves, instruments and fittings and Electronic.
Table: Unimech’s segmental performance for FY2018 compared to FY2017
Recent Financial Results
In QE31/12/2018, revenue rose 2.6% due to higher demand in valves, instruments and fittings segment but the profit before tax decreased by 16.3% during the current quarter was due to impairment in receivables and inventories of approximately RM1.6 million.
Graph 2: Unimech’s last 21 quarterly results
As at 31/12/2018, Unimech’s financial position is deemed satisfactory with current ratio at 2.0x and gearing ratio at 0.6 time. The only concern is the high level of inventories, with clocked in at a holding period o 385 days.
Unimech (closed at RM1.16 yesterday) is now trading at a PER of 8.3 times. At this PER, the stock is fairly valued.
Unimech has found a bottom at RM0.90-0.95. It has just moved above the 30-month SMA line, which may signal the beginning of its price recovery.
Chart: Unimech’s monthly chart as at Mar 12, 2019 (Source: Malaysiastock.biz)
Based on good financial performance and position as well as mildly positive technical outlook, Unimech may be a good stock for long-term investment.
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