KUALA LUMPUR (Sept 3): HeveaBoard Bhd, whose share price has risen 140.96% year-to-date, remains actively engaged in discussions with SHH Resources Holdings Bhd on various issues, including an acquisition, said its group managing director Yoong Hau Chun.

"The talks involve various issues and not only the merger. We are open to any possible opportunities," he told a media and analyst briefing today.

He added that nothing's been firmed up at this point.

The potential acquisition or merger was first reported by The Edge Weekly in March this year, which had reported that HeveaBoard was planning to acquire smaller counterpart SHH. At the time, details of the acquisition were reportedly being discussed.

HeveaBoard is a particle board-related manufacturer that exports to China and Japan, while SHH is a solid wood furniture manufacturer that exports to the United States. SHH has fully integrated furniture manufacturing facilities on 17ha in Pagoh, Johor.

Meanwhile, Yoong said HeveaBoard is venturing into the business-to-consumer (B2C) market, by adding eco-friendly children's furniture into its product pipeline.

In line with this, the group will pursue a digital marketing platform to expand its customers' reach and engagement.

Yoong said the venture is part of the group's strategy to continuously seek opportunities to expand and diversify its business, while maintaining sustainable growth.

"We believe we have the capability and resources to complete and educate customers on the importance of low formaldehyde products, when shopping for eco-friendly furniture," he added.

He pointed out that as living conditions in Malaysia continue to improve, people are willing to invest in home decoration.

"This will become a strong performing business for the company," he added.

Yoong also said HeveaBoard is on track to turn into a net cash position in the near term.

This, he said, was due to the term loan having been mostly repaired to less than US$9 million.

To date, HeveaBoard enjoys over RM237 million in tax incentives, which will be used to set off any future taxable profits.

HeveaBoard posted a record net profit of RM16.04 million for the second quarter ended June 30, 2015 (2QFY15). Revenue grew by 4.2% to RM111.38 million in 2QFY15, from RM106.9 million a year ago.

Heveaboard (fundamental: 1.4; valuation: 2.6)'s shares closed the morning session 4.17% or 4 sen higher at RM1 today, with 12.07 million shares traded. Its market capitalisation stood at RM419.59 million.

SHH (fundamental: 2.5; valuation: 1.4)'s shares, meanwhile, were up 1.77% at RM1.15, with 122,000 shares traded. Its market capitalisation was RM57.5 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)