Evergreen Fibreboard Berhad

$EVERGRN / 5101 (EVERGREEN FIBREBOARD BERHAD)
Research Report by HLIB

$EVERGRN / 5101 (EVERGREEN FIBREBOARD BERHAD)
Research by HLIB
BUY – TP RM0.48

"Results above expectations”

Evergreen recorded 2Q24 core net profit of RM7.6m (QoQ: +9.1x; YoY: +1.6x), which brought 1H24’s sum to RM8.3m (1H23: -RM17.7m). This came in above our expectations, making up 78% of our full year forecasts. The positive deviation was due to lower than expected selling and administrative expenses. Looking ahead, we expect 2H24 earnings to be sustained by (i) the increase in MDF capacity in Indonesia; (ii) elevated ASP for MDF; and (iii) higher orders for downstream products (value-added boards and RTA). In view of the positive results, we increase our FY24/25/26 forecasts by +66.0%/+36.0%/+27.0% respectively. Maintain BUY with an unchanged TP of RM0.48 based on 0.4x FY25 BVPS of RM1.20..

Analyst:
Tan Je Jyne
JJTan@hlib.hongleong.com.my

Evergreen Fibreboard Bhd is looking to increase its sales to East Asia as it reduces reliance on the Red Sea shipping lane due to heightened geopolitical tensions.

$EVERGRN / 5101 (EVERGREEN FIBREBOARD BERHAD)
Research by HLIB
Buy – TP of MYR 0.48

“Brighter prospects ahead”

Despite Evergreen’s revenue in 1Q24 dipping slightly QoQ due to a seasonally weaker quarter, revenue increased YoY thanks to higher sales volume and ASP from all segments. Consequently, 1Q24 GP margin improved both QoQ and YoY. Looking ahead, the group’s prospects are showing signs of further improvement on the back of: (i) the resilient Middle East market sustaining demand for panel boards; (ii) new export markets/customers from reducing its reliance on Red Sea transit as well as trade diversion from Western customers due to heightened scrutiny on Chinese imports; (iii) MDF capacity increase in Indonesia; and (iv) recovering US furniture demand. Maintain BUY with a higher TP of RM0.48 (from RM0.42) based on 0.4x FY25 BVPS of RM1.20.

Analyst(s):
Tan Je Jyne
JJTan@hlib.hongleong.com.my

$EVERGRN / 5101 (EVERGREEN FIBREBOARD BERHAD)
Research by HLIB
Buy – TP of MYR 0.42

“Stronger quarters ahead”

Evergreen recorded 1Q24 core net profit of RM751k (4Q23: -RM19.9m; 1Q23: - RM20.6m). Despite only making up 7% of our full year forecast, we deem the results to be within our expectation as we expect sequential improvements in the subsequent quarters. After imputing FY23 annual report updates, our FY23/24 forecasts are tweaked by +1.0%/+0.5% respectively. We also introduce FY26 forecasts. The improvements over the coming quarters will primarily be on the back of (i) the increase in Indonesia’s MDF capacity by 2H24; (ii) sustained improvements in MDF ASP; and (iii) stronger orders for downstream products. Maintain BUY with an unchanged TP of RM0.42.

Analyst(s):
Tan Je Jyne
jjtan@hlib.hongleong.com.my

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

General Meetings: Outcome of Meeting

Annual Report & CG Report - 2023

SHARE BUY-BACK STATEMENT IN RELATION TO THE PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

General Meetings: Notice of Meeting

OTHERSPROPOSED RENEWAL OF AUTHORISATION FOR THE COMPANY TO
PURCHASE ITS OWN SHARES OF UP TO TEN PERCENT (10%) OF THE TOTAL NUMBER OF ISSUED
SHARES OF THE COMPANY ("PROPOSED RENEWAL OF AUTHORITY FOR SHARE BUY-BACK")

$EVERGRN / 5101 (EVERGREEN FIBREBOARD BERHAD)
Research by HLIB
Buy (from Hold) – TP of MYR0.42

“Brighter outlook for FY24”

Despite results coming in below expectations in 4Q23, Evergreen’s subsequent quarters are expected to improve as its Indonesia MDF line is expected to see its capacity increase post completion of the relocation from Malaysia. The increased production output should be well absorbed by both the local market and by exporting to the Middle East. RTA sales to the US and EU is also expected to recover in 2H24 should the Fed begin to cut rates, auguring well for home sales and thus furniture demand. Moreover, Evergreen has also begun to diversify into Japan by increasing its RTA sales to the country, with management also looking at exporting panel boards to the Japanese market in the future. We raise our FY24/25 forecasts by 25.0%/21.1% respectively after imputing higher contribution from its Indonesia segment. Upgrade to BUY with a higher TP of RM0.42.

Analyst(s):
Tan Je Jyne
JJTan@hlib.hongleong.com.my

$EVERGRN / 5101 (EVERGREEN FIBREBOARD BERHAD)
Research by HLIB
Hold (Maintain) – TP of RM0.36

“Missed the mark”

Evergreen’s 4Q23 core net loss of -RM19.9m (3Q23: RM4.2m; 4Q22: -RM17.7m) brought FY23’s sum to -RM33.4m (FY22: RM30.1m). Results came in well below our full year core net loss forecast of -RM6.5m. The negative deviation was due to lower-than-expected sales and highertaxation. We cut our FY24/25 forecasts by -5.6%/-4.7% to account for lower sales volume. We continue to remain cautious on consumer furniture demand recovery in view of still elevated interest rates in the US. All in all, we maintain HOLD with an unchanged TP of RM0.36 pegged to 0.3x P/B based on FY24 BVPS of RM1.20.

Analyst(s):
Tan Je Jyne
jjtan@hlib.hongleong.com.my

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

Change in Nomination Committee - MISS HONG KIM HEONG

Change in Risk Committee - MISS TAN MUI PING

Change in Boardroom - MR KUAN KAI SENG

Change in Boardroom - MISS HONG KIM HEONG

Change in Nomination Committee - MISS HONG KIM HEONG

Change in Audit Committee - MISS HONG KIM HEONG

Change in Remuneration Committee - MISS HONG KIM HEONG

Change in Risk Committee - MISS HONG KIM HEONG

OTHERSChange in Sustainability Committee - MISS HONG KIM HEONG

$EVERGRN / 5101 (EVERGREEN FIBREBOARD BERHAD)
Research by HLIB
Hold (Maintain) – Target Price RM0.36

“Results in line”

Evergreen’s 3Q23 core net profit of RM4.2m (QoQ: +46.5%; YoY: -72.0%) brought 9M23’s sum to -RM13.5m (9M22: RM47.9m), which was within our expectation. As interest rates remain elevated, housing affordability remains low and has continued to contribute to soft furniture demand from the NA and EU regions. This has resulted in the group’s Malaysian segment remaining weak and may persist to 4Q23. Nonetheless, management has guided that demand from the Middle East and Indonesia remains steady, with no disruptions in Middle East demand from the Israel-Hamas war. Maintain HOLD with an unchanged TP of RM0.36 pegged to 0.3x P/B based on FY24 BVPS of RM1.20.

Analyst:
Tan Je Jyne
jjtan@hlib.hongleong.com.my

Quarterly rpt on consolidated results for the financial period ended 30/09/2023

$EVERGRN / 5101 (EVERGREEN FIBREBOARD BERHAD)
Research by Hong Leong Investment
Hold (Maintain) – Target Price RM0.36

“Steady performance in 3Q23”

Evergreen is expected to record similar results in 3Q23 as 2Q23, as performances across all three segments (Thailand, Indonesia and Malaysia) are expected to remain steady. The Malaysian side is still hampered by low demand from the US. Although there has been some pickup in US orders, it still remains unclear whether it would sustain for subsequent quarters. Indonesia is currently running at full capacity with expectations of increased contributions post relocation of the MDF line in 2024, while Thailand remains steady with sustained orders from the Middle East. Maintain HOLD with a higher TP of RM0.36 (from RM0.29) pegged to a higher P/B multiple of 0.3x (from 0.24x) based on FY24 BVPS of RM1.20.

Analyst:
Tan Je Jyne
JJTan@hlib.hongleong.com.my

OTHERSChange in Sustainability Committee - Madam Nirmala A/P Doraisamy

Change in Boardroom - MADAM NIRMALA A/P DORAISAMY

Change in Risk Committee - MADAM NIRMALA A/P DORAISAMY

Change in Audit Committee - MADAM NIRMALA A/P DORAISAMY