Friday 30 January 2015

Poh Huat - In Sweet Spot

Summary of research report on Poh Huat

Likely to benefit from US economic recovery
Improving US housing starts, normalising US unemployment rate, improving US consumer index, stronger projected US GDP growth in 2015 and 2016

Expected margin expansion going forward
Consolidating its business: cease loss making operation in China, operation in Malaysia focuses on office furniture, more favourable economic environment in its main target market, US.

Benefiting from weakening of RM against USD
The sales mainly denominated in USD

In net cash position
Net cash RM18.1mn as of 4QFY14 (17sen/share) from net debt RM21.6mn in FY11. Besides, it has book value of RM21mn of land held for property development, to be developed in future to broaden the revenue and income base of the group

Proven track record
Have been profitable since listing in 2000
Revenue and net profit grow at CAGR of 7.9% and 6.0% respectively
The MD has more than 30 years of experience in the furniture manufacturing industry
Profitable despite US was previously impacted by sub-prime loan crisis

Reasonable dividend yield
No official dividend policy and expected dividend yield of 5.0% and 5.5% for FY15 and FY16

Treasury shares
5.9% of treasury shares. Could afford 1:20 share dividend

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