Evergreen jumps 4.4% after HLIB starts coverage

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KUALA LUMPUR (April 7): Shares of Evergreen Fibreboard Bhd jumped 4.42% in morning trades today after Hong Leong IB Research  initiated coverage on the stock with a “Buy” rating at RM1.13 with a target price of RM1.47 and said the company was one of the top 5 producers of engineered wood-based products in Asia, which main products consisting MDF and particleboard, with combined annual production capacity of more than 1.3m m³.

At 9.27am, Evergreen rose five sen to RM1.18 with 644,600 shares traded.

In a report today, the research house said it believed the strong share price performance has yet to fully reflect its true fundamentals, as we anticipate Evergreen’s earnings prospects to remain bright in the near to medium term.

“We are projecting Evergreen’s net profit in 2015 to multiply from RM200,000 in 2014, to RM64.3 million-RM86.3 million in 2015 and 2016 respectively, underpinned by: (1) Higher selling prices; (2) Higher sales mix of value added products (which yield better profit margins); and (3) Management’s ongoing efforts in streamlining its operations.

“We initiate coverage on Evergreen with a Buy recommendation and target price of RM1.47 (based on 10x average 2015-2016 EPS of 14.7 sen), providing an upside of 30%,” it said