Friday 29 Mar 2024
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Evergreen Fibreboard Bhd
(May 25, RM1.15)
Maintain buy with unchanged target price of RM1.47.
Evergreen Fibreboard’s first quarter ended March (1QFY15) net profit of RM20.1 million came in above our expectation, accounting for 31.2% of our full-year forecast.

Although revenue declined by 8% to RM232.1 million mainly due to restructuring of certain operational facilities, which has in turn resulted in lower sales volume, 1Q net profit increased by 39.7% to RM20.1 million.

This was boosted mainly by lower glue and log costs and improved operational efficiency and synergistic cost savings arising from its restructuring of certain operational facilities.

Year-on-year (y-o-y) 1QFY15 performance turned around with a net profit from a net loss of RM2.6 million a year ago, thanks to lower production cost, higher selling prices as well as improved operational efficiency.

Risks include escalating raw material and labour costs, slower-than-expected demand for medium-density fibreboard (MDF), fluctuating foreign currency movement in particular the US dollar, and slower-than-expected turnaround at the saw mill and particleboard operations. — Hong Leong Investment Bank Research, May 25

Evergreen_FD_26may15

This article first appeared in The Edge Financial Daily, on May 26, 2015.

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