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I am expecting an eps of 35.8 sen for 2005. And needless to say, since my expectations is so high, I find that Eksons is currently very much undervalued which is why I am willing to stick some money into it.        
        
How to safeguard my expectations?         
        
Watch the net profit. For the next quarterly announcement in Feb, the bar is set to a minimum net profit of 15 million. If Ekson does NOT meet this target…  this is the warning sign to get out!!        
        
Need to be very alert here… since Eksons is in the timber sector… anything can happen… plus Eksons has no history of rewarding its shareholders. Watch the market reaction…         
        
And if its net profit is less than what it achieved in q2… ie 13.493 MILLION….. GET THE HELL OUT… RIGHT AWAY!       

Last edited on Fri Jul 28th, 2006 08:55 by Moolah

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net profit since 2003: 7.098 million, 17.599 million and 45.662 million

net profit margin since 2003: 2.75%, 6.72%, 14.59%

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We are downgrading our earnings forecasts for timber companies in our coverage as we trim our projected margins to factor in higher prices of logs and crude oil as we believe the impact of high prices of these two components on margins for Cymao, Jaya Tiasa and Lingui will be more severe than our expectation.

(1) Continued strength in price of tropical logs so far this year is positive for logging operations but has a negative impact on profitability of plywood manufacturing businesses. Generally, the timber companies in our coverage, with the exception of Cymao, are backed by large timber concessions that supply logs to the downstream plywood manufacturing operations. However, these companies also source part of their log requirements for plywood milling operations from other (related or unrelated) parties. Plywood prices, on the other hand, have been quite stagnant partly due to lackluster domestic plywood market in Japan which makes it difficult to fully pass on the increase in costs to plywood users.

• Product of a reverse takeover in 2000. Eksons Corporation is the product of a reverse takeover of Chongai Corporation (a garment manufacturer) back in 2000. The group specialises in the manufacture of thin plywood (as opposed to thick plywood), which are typically about 2.5mm to 3mm in thickness.


• Manufacturer of thin plywood. Eksons is said to be the only plywood manufacturer in Malaysia that specialises almost entirely in the manufacture of thin plywood (the other manufacturers are engaged in this activity, but to a much lesser degree). The manufacture of thin plywood is said to require

Market for products

• Sales is primarily focused on the export market and only about 7% is sold domestically. In 1Q FYE3/05, the main markets for its products were the US (45%), Korea (14%), UK (10%), and Egypt (9%).

• Used to focus on the China market. When Eksons was first listed in 2000, more than 80% of its products were exported to the China market. However, margins were thin and the group faced intense competition. As a result, a decision was made to switch market focus and by April 2003, the group had stopped exporting to China.

• Does not sell to Japan. Also, unlike most other timber manufacturers, it does not sell to the Japanese market, which requires the production of 3' x 6' plywood.

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