EVERGREEN 2022 first 2 quarters already earned 4.24sen, whole year will earn close to 10sen due to stronger USD / MYR rate. Do you think it is worth only RM0.40? Come on, apparently some big crocodiles are pressing the price down to collect. Just assume PE=8, easily the price can go up to 80sen or more!
from Q2 report: The Group’s revenue for the quarter ended 30 June 2022 increased by 54.8% or RM116.80 million to RM330.11 million from RM213.31 million recorded in the preceding year corresponding quarter. The increase in revenue was mainly contributed from higher average selling price and sales volume from all major category of products. Profit before tax for the quarter ended 30 June 2022 increased by RM18.55 million to RM23.13 million from RM4.58 million recorded in the corresponding quarter of the preceding year. Despite higher raw material cost, the higher profit was mainly contributed from higher margin resulted from higher average selling prices and higher foreign exchange gain.
the Group has achieved positive and improved results in the first half of 2022, compared to the same period in 2021. With our diversified base of operations in Malaysia, Thailand and Indonesia as well as having multiple income streams from raw boards to downstream, the Group manages to draw on the strengths of each country and market segment to mitigate the shortcomings. The Group is also seeing the benefits from expanding its downstream activities and from past investment in automation and cost restructuring which has resulted in more contributions from downstream as well as a leaner cost structure. The improvement in market demand for furniture has also been capitalized by the Group with improvement in average selling prices
It’s upstream biz will decline due to decreasing timber prices. It’s downstream biz is much smaller and should mitigate the negative situation a bit. Don’t look at past results as share market is forward looking.
hi sense maker, Evergreen is now growing its downstream (knock-down furniture) business in huge pace and also producing more higher grade / enhanced wood product. they are not only producing pure MDF or plywood, but also enhanced wood product which garners higher profit margin.
Lumber prices crashed from usd14000 in May 2023 to usd400 now in US. Shareholders panicked and threw off Evergreen. Not sure how well the company can manage its average selling price especially in its upstream biz.
Hi Sense Maker, I thought with lumber prices crashing down it is good news for Evergreen since their log supply cost will be lower and therefore production cost will be lower ? Could you please enlighten me a bit. Thanks
A few possibilities: 1) Biz orders, sales and average selling prices plunged. 2) Management made a big mistake like holding too much inventory when average selling prices are plunging or allowing receivables to shoot up. These tighten cash flow and increase future losses. 3) Public free float is very high in this company. 500m plus shares are speculative in nature and panicked easily when global asset sell off occurred. Fundamentally, the company remains sound. 4) A fraud has occurred but this is unlikely as the company made no public announcement in that respect.
Insiders would sell first as usual if there’s anything untoward that already happened . Outsider Shareholders can only hope the sell off in the company is only due to factor 3). Let’s see.
Sense Maker, thanks for your in-depth and thoughtful analysis. Yes, overall market sentiment is quite bad and fear outweighs greed in the current hostile climate. No one dares to buy in a big way as a recession for sure will set in/ already set in some countries like the UK. Demand for Evergreen's products will definitely be affected. Therefore fair value will no longer be RM0.8 and will be adjusted downward.
Two days rebound and now selling pressure again!. I think with US in recession, demand for furniture ( optional item and can be defferred) will be affected. Evergreen sales will be affected accordingly. HLI have target of RM0.61. May be the actual value could be much lower. It is anybody guess
From the latest quarterly results, the company biz and profits remained good. Maybe slowdown has yet to set in, but when it comes it should be mild and swift in passing. Going forward, this company generates RM150m operating cash flow a year with insignificant capex, now selling to you for RM360m. This company should be trading at around RM1b market capitalisation or RM1.18 per share, now that it has expanded its downstream biz, started moving its fibreboard manufacturing to Indonesia and completed internal cost structure rationalisation. The current share price looks very appealing.
2 Comment on Material Change in Profit Before Taxation Against Preceding Quarter Current / Immediate Quarter Preceding /Quarter Changes 30-Sep-22 30-Jun-22 RM’000 RM’000 % Revenue 253,532 330,111 -23.2% Operating Profit 60,518 89,654 -32.5% Profit/(Loss) Before Interest and Tax 20,968 24,341 -13.9% Profit/(Loss) Before Tax 19,537 23,127 -15.5% Profit/(Loss) After Tax 15,203 18,339 -17.1% Profit/(Loss) Attributable to Owners of the Company 15,203 18,339 -17.1%
The current quarter revenue decreased by 23.2% to RM253.53 million, as compared to RM330.11 million recorded in the preceding quarter. The decrease in revenue was mainly resulted from lower average selling price and sales volume from panel boards. The Group’s profit before tax was reported at RM19.54 million for the current quarter, compared to RM23.13 million recorded in the preceding quarter. The decrease in profit before tax was mainly due to lower sales.
@sense maker, i agree with you. EVERGREEN is one of the most under-rated companies in Bursa. It can make around 8sen EPS in a full year and just do a simple valuation at PE of 10, it should at least worth 80sen in the share price. Buying the share at below 40sen has huge potential to make great return up to 100% return
Look at the total cash flow, the cash profits and EBITDA it generates each year, not just earnings or PE. Depreciation expense a year which is non-cash is RM0.09 a year. Look at how its cash balance grew over past years, and into future when capex needs diminish. Keep accumulating and hold tight till RM1.
RM60m impairments and write-offs at year end. Excluding the foregoings, the company broke even ie didn’t make or lose any cash from operations in latest quarter. Orders have shrunk a lot amidst falling selling prices. The company’s return to positive accounting profits depends entirely on recovery of global furniture demand.
Q4，2022， The Group’s revenue for the quarter ended 31 December 2022 decreased by 33.1% or RM95.17 million to RM192.32 million from RM287.49 million recorded in the preceding year corresponding quarter. The decrease in revenue was mainly resulted from lower average selling price and sales volume. Loss before tax was reported at RM74.15 for the quarter ended 31 December 2022 as compared to profit before tax of RM15.49 million recorded in the corresponding quarter of the preceding year. The loss was mainly due to lower foreign exchange gain and non-cash losses such as impairment of plant, machinery, inventory and goodwill and loss on disposal of AOC as explained in Malaysia segment and Thailand segment above.
31 sen is cigarette-butt price. Demand for its products will recover after a quarter or two. In 2022, this company still made RM116m operating cash. In 2023, maybe just RM20-30m. But in 2024, it should rise to around RM80-90m. Buy when others are fearful.
A lot depends on whether the company will manage shareholders’ expectation by giving dividend of at least 1-1.5sen, to be announced by end of next month. If it can give 5% yield at current market price, most shareholders will support and won’t sell their shares.
Q4 2022 struck the company very hard as some inventories in hand were sold subsequently at a loss, triggering some inventory impairment. This shows the company’s biz model isn’t very resilient and is subject to huge fluctuations in their product demand. The coming quarterly results in May are important as shareholders would like to see that the company at least stop bleeding operating cash, ie sustaining net losses of less than RM17m. The slowdown in order is very severe but the moment the company can guide via prospect commentary that recovery is insight, the share price will recover in tandem. But this company’s share always moved way before quarterly results announcement, so you may wanna give this company at least 2 more quarters before it can return to profitability.
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Posted by Mak_kiah > 2022-08-23 08:24 | Report Abuse
Delivery a good QR during the bearish season, 2020- GLOVE , 2021- Technology, 2022- Plantation , 2023- Logistic .