IMHO, when forex drops by 10%, Hevea's profit will drop by a lot more than 10%. This is because more than 90% of Hevea's sales is from exports while most of its cost is in RM. Hevea's 4Q2015 revenue was RM150mil. If USD dropped by 10% and 90% of RM150m is in USD, that means sales would have shrunk by RM13m. But cost would not drop by much since they are mostly in RM. Taking into account 14% tax rate, that means its PAT would drop by RM11mil if forex drop 10%. Assuming Hevea can repeat 4Q2015 production performance (which itself admits 4Q always is their best quarter), its PAT would drop from RM26mil to RM15mil or an EPS of 3.4sen. Annualised, it would be RM0.135.

For now, I dont look at forex. I will focus on their 1Q2016. If they can earn more than RM26m then I will feel secure investing in them. That profit level means all their talk about cost savings are for real. These are long term features, not fickle lalang-follow-the-wind type of 'benefits' like high forex. And if they can earn RM26m in their worst quarter, that means they should meet consensus profit level of RM120mil for the year, if their RTA kicks in as expected. At 25% dividend (MINIMUM), that's 3.5% dividend yield. If their board feel generous, I can expect more dividends, giving me on par returns as FD while waiting for the market to wake up and realise what a gem they've missed out on that's EVF.

1Q2016 almost over. Traditionally 1Q is a weak Q for EVF. They say due to short month, CNY and also buyers holding back until furniture fairs (held in March) are over. If we look at 1Q2015, EVF reported PATAMI of RM20mil. If we remove forex gain, EVF only profited RM18mil.

2Q normally is strong for them, due to recovery from furniture fair held back orders, low log price due to dry season and no major holidays. EVF 2Q2015 PATAMI is RM24mil. Stripped off forex gain, around RM23mil.

2Q2015 USD1 was around RM3.7. Now USD1 about RM4 or about 8% higher. Assuming revenue of RM260mil (based on 2Q2015), 8% gain in forex would result in RM21mil additional profit. But EVF only has 70% revenue denominated in USD, and their glue cost is denominated in USD. Glue makes up around 30% of their cost. Their spare parts used in upkeep also denominated in USD plus they have some USD loans as well. So all in say they only benefited by 30%. So 30% x RM21mil = RM6mil additional profit due to stronger USD compared to 1Q2015.

If we based on 1Q2015 results, we are looking at EVF 1Q2016 PATAMI before forex of RM24mil or RM29mil if based on 2Q2015 result. So the test would be this: if EVF reports a PATAMI before forex of RM24mil, then their operating conditions didnt change from since 1Q2015. However anything more than RM24mil would mean they are more profitable than 1Q2015 due to either better ASP or lower cost or both. If they could report figures of RM29mil, that means their 'worst' quarter of 2016 is as good as or better than their 'best' quarter of 2015. This means significant improvement in cost structure.

EVF's operating conditions in 1H2016 should be largely similar to 2015 in that there is no contributions from RTA, a plant relocation and restart of particle board. Any improvements would be due to better forex, ASP and/or cost structure. 1Q2016 USD is lower than 2H2015. ASP shouldnt be any better due to low oil price affecting their Mid East customers. Most likely source of improvement would come from lower cost.

andrewhlc, thanks for the link. Good to hear the MD says to expand capacity by 10-15% although it is a bit difficult to imagine he could expand so much by only spending RM20mil. Hevea earned RM500mil in revenue for 2015. 15% of revenue (not capacity yet), means RM75mil in additional sales. Hevea also made PAT of RM73mil. 15% of that means additional RM11mil profit although it should be more and not just linear additions due to econ of scale.

But now after reading the article, I'm worried about another issue: dividend. It is in net cash position of RM60mil as at 31.12.2015, it expects to do well in 2016 but the MD says no guidance for dividend payout? It should easily add another RM60mil net cash by end 2016 if it merely maintains 2015's performance and paid RM20mil cash for capex. That's RM120mil net cash vs PAT of RM75mil. Even if it pays out 50% profit as dividend, it will still retain over RM80mil in cash.

Dont tell me Hevea is thinking of acquiring another company???? Otherwise sit on the cash for what? Reward shareholders! Hahahaha.....

One thing holding back Hevea shares is the huge volume of warrants outstanding. Since Feb 2016 already a few million converted to shares causing dilution. Share buybacks in similar period only around 300k shares bought back. But I guess one can also say when warrants convert to shares, Hevea will have more cash in hand? Hope for more dividends.

But wonder why Hevea is not expanding its business? No news of major capacity expansion in spite of good margins earned?

In 2Q2015, EvG reported PATAMI of RM23mil, excluding forex gain. That was when USD1:RM3.68. Even assuming no improvement from EvG despite all the cost savings measures, new CAPEX put in, RM100mil cash in the kitty from private placement, we are looking at RM92mil PATAMI annualised. At PE10x, EvG should be worth almost RM1.10.

Glue and log price are lower now than they were in 2Q2015. A 5% drop in log and glue cost would translate to easily RM5mil cost savings per quarter or RM20mil a year. Paying down debts by RM100mil and saving 5% loan interest would net another RM5mil. So taking 2Q2015 PATAMI ex forex gain and annualising it, then add in cost savings from lower cost of log and glue plus lower interest expense, I dont think EvG has a problem achieving RM120mil in PATAMI for 2016. That's EPS of 0.14. With just PE 10x, shares should be worth RM1.40 a piece. Current book value is already at RM1.40 per share.

But seriously, EvG cant have done all those upgrades and not benefit anything from it. And USD is now still above RM4.1, not RM3.70 as it were in 2Q2015. I have not even factored in contribution from the new furniture line. Now EvG has dividend policy of minimum 25%. At RM120mil PATAMI, we are looking at close to RM125mil PAT or around 3.7sen dividend per share MINIMUM. At current share price of RM1, that's 3.7% yield.

So in terms of PE valuations, book valuation and dividend yield, EvG share price is now dirt cheap. That's if you follow fundamental investing. If you do not follow fundamentals, then please do all of us a favor and not try to find any 'concrete' evidence trying to justify your sell call for EvG. Sell EvG shares by all means but be honest, that sell call is backed only by negative market sentiment, nothing else.

RM2mil from powerplant, RM3mil from forex.... RM3mil impairment.To me these are one off factors. Plus the fact is, we are looking at a company with RM100mil profit. What's 2-3mil a year? Really can forecast so accurate until 2-3% is considered material deviation? To me this is all just noise and people justifying their preconceptions. If you think a company is bad, even a speck of dust will be played up. If you believe the company has legs to run the distance, just hunker down and enjoy the ride. EvG now has dividend policy to back up their share price. If you enter at RM1.10 and they pay RM30mil dividend for FYE2016, that's already 3.2% yield. The only 2 main questions about EvG now is their ASP (affected by USD & GDP) and their impairment. For impairment, if in 2013 and 2014 no major impairment was made and in 2015 when even newbie auditor who normally is jittery as a kitten only provide for RM3mil impairment, I dont see why there should be impairment in 2016 especially when all plants will be up and running. Who knows, the impairment might even be written back! If you are a long term investor, then look at the fundamentals of a company by reading the news, reading their AR, reading analysts reports. If you are short term trader,then ignore all the above. Your only guide is market sentiment.

Directors didnt sell la, who tell Max Yong that news? If the directors play goreng shares, EVGN share price would have been much more exciting from a long time ago. But I have no idea why the stock tumbled so badly except that all export counters got hit bad. It was really good for EVGN to have taken advantage of their earlier high share price to do placement and bonus issue. I'm having more confidence in the mgmt team....

Thanks iloveshare128! I have the emailed copy but I dont think i3 allow attachment upload?

New TP from CIMB: RM2.06

From up 6sen to become drop 6sen....haiyo.... steady my beating heart....

Today bonus go ex. very volatile. High to 1.66 then now drop 1.58. All in less than 2 hours hahaha

wah! moniekj is like tukang tilik. go up max until 1.66 then drop already.

hua!! what a big swing!! investors switching from hevea to EVGN perhaps....

Hong Leong only up TP once old TP breached. I guess they are more conservative

CIMB target price is RM3.08, up from RM2.90 in mid 2015

If I want to share a PDF file here, how do I go about doing it? Thanks

Jakarta terrorist attack, weak oil, still weak China stock market.... I think the market will be quiet going into weekends.

A good report from HLIB. Thanks for sharing Alfred! HLIB only give PE of 11x. I think it is rather conservative seeing how EVG is growing its profits through internal efficiency/product diversification. Another potential re-rating catalyst is when EVG declare dividends. Hopefully we see another run when bonus shares starts trading.

If I were Hevea shareholder, my heart sure cant tahan. Share price down and up and neutral. I think EVGN shares didnt move much because the attention was on Hevea. It's good that the Hevea MD came out to clarify but I wish he had done so via announcement on Bursa so that all investors can have equal access and not just to select CIMB clients. Now I will say upfront I'm bias towards EVGN so I wont say too much about the MD's replies. All I will say is if I were Hevea shareholder, I wished for better reply. When I read the MD replies (at least according to what CIMB write), I feel the answers were a bit reserved and only partially answered the questions. When I read the report by CIMB carefully, I dont feel the MD answered the allegations fully.

The main point I wanted to share with everyone is the fact that Hevea is going to 'fully repay' all its debts. Presumably they are referring to major USD/Euro loans and not ALL debts like the usual trade and non-trade short term debts. People celebrate this as a good thing. To me, it's double-edged. EVGN has loans, most of it short term and in RM but there are some not-too-small USD loans. I think they will load up on some more forex loans in future to finance their expansion, according to the analysts who cover EVGN. So having USD loans vs settling USD loans now, which is better? To me, USD is very high now so if you settle now, basically means there is realised forex loss. Imagine Hevea who took the loan of say USD10mil 5 years ago, that would be say RM35mil. But now, for every USD1 loan they repay, it will cost them RM4.40. But I guess Hevea doesnt have much choice bcoz they need to pay once it comes due. Good thing is in future, they dont need to service loan. Bad thing would be they paid it off when it was expensive, RM wise. Also once RM strengthen, their sales income would drop and they have no USD loan to offset and report as forex gains.

Different for EVGN. In future, when RM strengthens to below RM4, while EVGN will take a hit to its earnings like Hevea, EVGN will report forex gains from its USD loans. If they take a USD10mil loan now, they receive equivalent RM44mil but when RM is at say 3.5, the gains could be massive. If they buy the machine in USD/Euro in 2016 when RM is weak, the asset value will be high. They can claim higher capital allowance in RM.

I'm just sharing another view on the point of having USD loans or not. I'm glad EVGN prices are more steady as the roller coaster ride of Hevea is too much for an old-timer like me. As long as the trend is a steady UPWARDS one and not the downhill slide, that is!

massive rebound. very active forummers here.....

syndicate???? oooooo....... No one asked me to be part of their syndicate huhuhu.... So I only rely on fundamental (and the occasional market rumour). EVGN looks fully valued at 15x EPS if based on 2015 results. If based on 2016 forecast, RM2.50 price means 12x which is where Hevea is now. If we take 15x then we're looking at TP of 3.19, an upside of 28%. If they resume dividend, then could be another re-rating catalyst. Fundamental wise, I like this counter. Got growth story for 2016 and 2017 (if you buy into their expansion story - which I do), got potential dividend return not yet priced into the stock and the macro situation looks to be in their favor for at least the next 6 months.

Went up strongly in the morning session yesterday. After that was mired deep in the red territory before clawing back towards the end to drop 1sen. What a roller coaster! Could evergrn be also impacted by heveab?

I also cant view anything. The pics wont load. I tried viewing the page in Chrome, Opera and IE. Same nothing. Anyone can help? Thanks