Evergreen just announced its results for 3Q2009 ended 30/9/2009. Its net profit increased by 201% q-o-q or 91% y-o-y to RM31 million while turnover increased by 17% q-o-q or 10% y-o-y to RM212 million. The company explained the improvement:
The increase in the Group’s revenue was largely due to higher sales volume contributed by recently acquired subsidiary, Evergreen Fibreboard (Nilai) Sdn. Bhd. (“EFN”) (previously known as Hume Fibreboard Sdn. Bhd.) and from the new third line in our Thailand operation. The Group’s profit before tax also registered significant improvement as compared with the preceding year corresponding quarter due to the decline in raw material cost, cost cutting measures and improved operational efficiency even though average selling price was lower.
Table 1: Evergreen's 8 quarterly results
Chart 1: Evergreen's 21 quarterly results
Valuation
Evergreen (closed at RM1.50 yesterday) is now trading at a PE of 14 times (based on last 4 quarters' EPS of 10.6 sen). Using the past 4 quarters' EPS may understate Evergreen's earning in the current year. A better estimate may be obtained by annualizing its last quarter's EPS of 6.03 sen: giving a full year EPS of 24 sen. Based on this figure, Evergreen's PE would be 6.2 times. At that multiple, Evergreen is considered fairly attractive.
Technical Outlook
Evergreen has surpassed its medium-term downtrend line at RM1.50 on Nov 9 & 10 (achieving a high of RM1.62). As at 3.45pm, Evergreen is trading at RM1.44- struggling to hold onto the breakout level today. Failure to cross to do could lead to a technical pullback, with support at the horizontal line of RM1.20.
Chart 2: Evergreen's weekly chart as at Nov 17, 2009_12.00noon (Source: Quickcharts)
Conclusion
Based on the improved financial performance & undemanding valuation, Evergreen may be a good stock for long-term investment. From the technical perspective, the stock is at a critical juncture, where continued uptrend is possible if the share price can stay above RM1.50. Failure to do so, could result in consolidation.
4 comments:
Hi Alex,
Would you mind to do an analysis (both FA & TA) for AnnJoo Resources.
Thank u in advance.
Surewin1woh
Good evening Alex,
Thank you for the previous posting.
I heard of HL Capital, any good for short term buy?
Hi surewin1woh,
I will look at Annjoo's financials later. Chartwise, Annjoo is in an uptrend. It has broken above a strong horizontal resistance at RM2.70-75. Its next resistance is at RM2.90-3.00.
Hi Solomon,
In May, HLCap broke above its downtrend line at RM1.10-12 and thereafter consolidated in a trading band of RM1.00 & RM1.20. On Nov 16, HLCap has a sharp rally after the upside breakout of that trading band.
Looking at the intra-day chart, one can see that the stock rallied sharply in the first 30 minutes yesterday- opened at RM1.28 & hit a high of RM1.60- and then slid to about RM1.40. Has the selling subsided or will it continue today? Will we see another sharp rally at the opening bell? Trading in this situation is like running with the bulls in Pamplona. It's an exciting & dangerous sport.
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