KUALA LUMPUR: The rally of furniture-related stocks remains strong, lifting the share prices of fibreboard and chipboard makers to multi-year or record high. 

The surge in interest in this breed of stocks is mainly because the furniture sector, which has been in the doldrums for several years, is now a good proxy to the United States economic recovery and the strong greenback. 

Stocks such as Evergreen Fibreboard Bhd (fundamental: 0.85; valuation: 0.3) soared to a five-year high of RM1.91, up 4.9% from last Thursday’s closing of RM1.82, and Mieco Chipboard Bhd (fundamental: 0.65; valuation: 0.9) rose five sen or 4.55% to RM1.15 yesterday, while Lii Hen Industries Bhd, (fundamental: 2.8; valuation: 2.4) surged to an all-time high of RM5.38, gaining 15 sen or 2.9% yesterday.

Year to date, both Mieco’s and Evergreen’s share prices have tripled from 38 sen and 63 sen respectively, while Lii Hen's share price has almost doubled from RM2.71 so far this year.

Despite the big leap in share price, both Mieco and Lii Hen are trading at price-earnings ratio (PER) of 9.36 times and 10 times respectively. However, Evergreen, which managed to return to the black in the first quarter ended March 31, is currently trading at a PER of 40.9 times. 

Analysts said in the absence of fresh catalysts, the export-oriented furniture-related sector is the bright spot in the current weak market, besides glove manufacturers.

Year to date, the greenback has gained 8.58% against the ringgit. The ringgit closed at 3.7968 per US dollar last Friday.

This article first appeared in The Edge Financial Daily, on July 21, 2015.