Evergreen Fibreboard Bhd (Trading Buy)

• EVERGRN manufactures engineered wood-based products such as medium density fibreboards and particle boards.

• For 3QFY21, EVERGRN’s sales decreased to RM201.0m (-11.2% YoY) impacted by the disruption of operations due to the FMCO. However, the group’s net profit increased to RM5.3m (+253.3% YoY) due to improved profit margins from its foreign operations. This brought their 9MFY21’s net income to RM19.1m (versus a net loss of RM21.7m in the preceding period).

• Consensus is currently forecasting EVERGRN to register a net profit of RM20.4m in FY Dec 2021 and RM47.0m in FY Dec 2022, translating to forward PER of 9.3x this year.

• Chart-wise, after plunging 90% from a high of RM0.92 (in end-July 2017) to a low of RM0.09 (in end-March 2020), the stock subsequently bounced off from the trough to plot a series of higher lows (indicating that the stock is on an uptrend) to close at RM0.515 yesterday.

• Coupled with the crossover of the shorter term EMA above the longer term EMA, a continuation of the upward movements in the stock price is anticipated.

• With the Parabolic SAR indicator also pointing upwards, we anticipate the stock could climb and challenge our resistance targets of RM0.59 (R1) and RM0.62 (R2), which represent upside potentials of 15% and 20%, respectively.

• We have pegged our stop loss at RM0.445, which represents downside potential of 14%.

Shin Yang Shipping Corporation Bhd (Trading Buy)

• SYSCORP’s core businesses are in shipping, shipbuilding, ship repair and other related services. Its shipping operations cover dry bulk, liquid bulk, containers and coastals, barges and tugs and international shipping segments.

• In its latest reporting period (1QFY22), the group registered a net profit of RM11.9m (+310% YoY) due to improved margins and increased shipment volume.

• Technically speaking, the stock is currently treading above the 200-day MA (suggesting that the stock’s uptrend is intact), which is backed by a rising ROC indicator.

• Thus, we anticipate the stock could resume its uptrend soon and challenge our resistance levels of RM0.43 (R1: 13% upside potential) and RM0.45 (R2: 18% upside potential).

• We have pegged our stop loss at RM0.34 (or an 11% downside risk).

Source: Kenanga Research - 27 Jan 2022