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Relook at Evergreen and compare its performance with Mieco that is in similar biz and almost similar size in its facilities.
E'Green Mieco
Sales/Fixed Assets(Times) 1.12 0.5
Over 9 mths

T. Debtors turnover(days) 24 68

Inventory turnover(days) 32 61

Growth(Last 9 mths) 43% 5%

cash fr Operating Activity RM152M (RM21M)

Net Profit AT RM105M (RM2.6M)

Despite Evergreen growth of 43% this year, it can still generate positive net cashflow from its operating activities of RM152M whereas with a mere growth of 5% in Mieco, it generates a NEGATIVE net cash flow of RM21M. What can I say? It boils down to Evergreen's superior working capital management.
Just look at the Gross profits of Evergreen. Despite its growth of 43% this year, its GP margin increased from 29% to 36%. It looks like the management has added more value an/or getting better prices for its products despite its 43% growth. This is extraordinary.
Evergreen's recent expansion to Thailand and Indonesia will likely strengthen its raw materials supply ­base­ as well as its customer ­base­ which will add to its competitiveness.
Its rapid expansion will be subject to higher operational risk, that's no doubt about it.
Of course the market bearish systemic risks cannot be underestimated and the daily trading volume has yet to confirm an upwards run on its prices but as for me, I have started to accumulate Evergreen.
Some counters are like some ladies. The more you look at them, the prettier they become.

bert,leno,
I like the way you expressed your opinions and the way you analysed Evergreen. Few can do that so well.
Fundamentally, it looks okay; technically, I see it coming against a high wall at 1.75. Let's see if it can scale or break this high with high volume.
One thing I am concerned is that I can't find one very successful company in this category of business. Can you think of one?

Yea Ben, can't see any company that is very successful but there are some that are relatively profitable like Norbord fr Canada and the nearest one is Vanachai in Thailand.
Well in any investment there is risks but when the Company's management consistently made decisions that are good and correct, I tend to like the company despite the risks. If you look at Evergreen, its competitive advantage would be: having a good biz model that is ready for rapid expansion (expected to expand 30% in 2008), have a good spread of customers' ­base­ spanning 40 countries, have a good spread in locations of its factory to ensure fast and cheaper raw materials supply, its recent expansion that are successful, in a growing market/industry and its current selling prices relatively strong/steady.
Of course it has its risks as well like: the housing problems in US (US account for 10% of its total revenue), weakening US$(Last 3 months US$:RM decline by abt 1.5% which may wipe out RM3M-RM4M of Evergreen's profits, recent fire in Sept 07 gutting its stamping section that may stop one production line with output of 5000M3 per month for next 3 months(Loss of revenue of RM15M)
As the saying goes, there is no free lunch. Need close monitoring on US$, oil prices, Plywood and MDF prices etc.
It's good to have this counter in your portfolio but not one where you put all your eggs into it.

Hi leno and bert,

Thx a lot for your comment...

Best Rgds