I have posted up some analyst reports of UMW here, and you can read some very good analysis from Investssmart here. This is more or less a 50/50 play on the oil and automotive sector, so it’s important to be aware of what I call sector contamination (i.e. one sector doing well when another isn’t). These second quarter results showed contamination from lower car sales affecting their oil sales. Mr Market took a look and shrugged its shoulders (as you can see below).
I am not going to repeat the comments of both Mr Investssmart and Mr DB Analyst, but will add that investors will probably also focus on its decreasing cash flow, and negative news on the car sales or oil price front might cause this baby to get whacked. If that happens I will be there to pick up some shares because its good balance sheet and positive cashflow makes it a great defensive stock in my book, at ooooo, maybe around the 6.50 - 6.80 range (even though DB’s valuation puts it at 8.10 - I know I’m a stingy penangite).
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