Are You Impressed With Uchi's Earnings Recovery?

Blogged the following posting the other day: Investing In A Stock For Its Dividend Yields

Uchi Tec announced its earnings the other day. There was some improvement. It made some 10.3 million. (previously it made some 9.187 million only). For sure, one can say that there is great improvement if one looks at its recent quarterly earnings result. Here's a snapshot of Uchi's earnings provided by KLSE Tracker.

Reading left to right, one can see Uchi's earnings improving from 2.771 mil to 4.665 million to 9.187 million to 10.3 million.

And if one based their reasonings on just these set of numbers, surely one would have proudly proclaim that the numbers are very impressive. Some would even call it as growth.

So what's wrong with such numbers?

Almost a year ago, on 25 Feb 2009, I wrote this Yet Another Update On Uchi.

• We are no longer talking about slowing growth but now we are talking about DECLINING earnings!

Uchi used to be a fantastic growth stock.

Look at that awesome track record. From making 23 million in its fy 2000, Uchi managed to earn a whopping 83.888 million in fy 2006. And with a net margin of 54%, it was truly awesome and the stock flew up, up and away.

People bought the stock because it was a growth stock.

But as most would and should realise that it's highly unlikely such a growth could last forever.

Fy 2007, Uchi made 78.228 million,
FY 2008, Uchi made 58.748 million.

And the following chart highlighted in the posting, Yet Another Update On Uchi, showed the great decline.


And the earnings made recently showed Uchi made only 26.953 million for its fy 2009.

So despite the strength seen in its quarterly earnings, the overall decline in Uchi's earnings is a concern, yes? Here's a compiled table.

How?

The very first table clearly showed promise in Uchi's last 4 quarterly earnings but as impressive as they were, the numbers simply paled in comparison. Besides declining profits, net margin and sales revenue have been declining drastically too!

Of course, the optimistic might bet on this stock because they like what they have seen in Uchi's recent earnings. They believe and argue that the worst is over for Uchi.

Some are still cautious and skeptical. These numbers simply pales in comparison to what Uchi had done before and they are skeptical and doubt if the current recovery is sustainable.

Some believe the worst is over for Uchi but on the other hand, they reckon the recovery growth could very soon taper out.