KUALA LUMPUR: Evergreen Fibreboard Bhd
may proceed its earnings growth momentum following a commendable 3Q21 end result, regardless of rising uncooked materials prices.
In a report, Hong Leong Investment Bank (HLIB) Research mentioned the sturdy demand and rising common promoting costs within the panel boards and furnishings market is anticipated to outweigh these near-term challenges.
“With the anticipated flip round in its Malaysia phase in 4Q21 and sustained optimistic contributions from its regional operations (supported by causes highlighted above), we imagine Evergreen is on track to ship commendable leads to 4Q21, with earnings growth momentum sustaining in to FY22,” it mentioned.
Rubber woods prices have elevated throughout all three of the group’s working international locations, with Malaysia experiencing a extra pronounced improve doe the flood and wet season.
Glue costs in the meantime have risen greater than 30% due to elevated fertiliser utilization in oil palm plantations, which resulted in larger urea costs.
However, HLIB mentioned it expects uncooked materials costs to begin normalising as soon as climate circumstances enhance whereas glue prices could have peaked and should begin easing from February 2022.
In addition, the group’s utility for overseas labour consumption ought to present upside to the group’s ready-to-assemble phase, it added.
HLIB maintained its “purchase” name on Evergreen Fibreboard with an unchanged goal worth of 67 sen per share.
In its current 3Q outcomes, Evergreen recorded a core internet revenue of RM2.6mil, which introduced 9M21’s internet revenue to RM12.8mil, a turnaround from a RM20.1mil loss within the earlier corresponding interval.
