Evergreen is nearing its uptrend line

I have first called a BUY on Evergreen in May 2006, when the share price broke to the upside of the then prevailing downtrend line at RM0.90 (go here). Since then the stock has done fairly well as its financial performance has improved steadily.

The last financial results available was the results for QE30/9/2007. The net profit has increased by 77.4% y-o-y from RM18.3 million to RM31.6 million, while its turnover has gained 46.7% from RM137.9 million to RM202.4 million. The net profit was however lower than the preceding quarter's net profit of RM32.1 million, even though turnover was 5.1% higher. The decline in net profit was attributable to higher log price in Thailand (due to the rainy season); higher freight charges; and partial loss of production in its Johor plant due to a fire.



If Evergreen can maintain its current EPS of 6 sen per quarter, it will net a full-year EPS of 24 sen. At the present price of RM1.37, the stock is trading at a PE of 5.7 times. This is very attractive.

The technical outlook for Evergreen is not too bad. It has corrected back to its medium-term uptrend line support RM1.30-35. This is also a strong horizontal support for the stock.


Chart: Evergreen's weekly chart as at January 31, 2008 (courtesy of Quickcharts)

Based on attractive valuation & nice technical set-up, Evergreen could be a good BUY.