Friday, 1 March 2013

Evergreen Fibreboard - Seeing Red

Evergreen  plunged  into  the  red  in  4QFY12,  posting  net  losses  of  RM4.6m  for  the quarter on the back of both lower sales volume and weaker ASPs. FY12 earnings of RM33.6m  (-46.8%  y-o-y)  missed  expectations  amid  significant  revenue  and  cost pressures.  Challenges  continue  to  plague  the  company  as  additional  production capacity  in  other  ASEAN  countries  intensifies  competition.  We  are  slashing  our FY13-FY14  net  profit  forecast  by  22.1%-29.0%,  thus  lowering  our  FV  to  RM0.60. Maintain NEUTRAL.
Far below estimates. Evergreen registered 4QFY12 revenue of RM235.3m (-20.5% y-o-y, -5.1% q-o-q) and losses amounting to RM6.4m as operations suffered the double whammy of  both  weaker  sales  volume  and  selling  prices.  Full  year  FY12  revenue  and  earnings came in at RM1,032.0m (-2.8% y-o-y) and RM33.6m (-46.8% y-o-y) on the back of sharp increases in glue and log prices (higher raw material costs), higher electricity rates, weak sales volumes and declining selling prices. FY12 was a year characterized with significant revenue and cost pressures, which led to a 2.4ppt EBITDA margin contraction. The year’s earnings accounted for only 59.4% of our and 61.7% of consensus estimates.
Source: OSK

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