HLIB Research raises target price for HeveaBoard to 48 sen

HLIB Research raises target price for HeveaBoard to 48 sen
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KUALA LUMPUR (Sept 9): Hong Leong Investment Bank (HLIB) Research raised its target price (TP) for HeveaBoard Bhd to 48 sen from 40 sen, saying today orders secured by the company’s ready-to-assemble (RTA) furniture manufacturing division until February 2021 are encouraging.

"While uncertain ASPs (average selling prices) for the particle board segment will continue to cloud near-term earnings visibility, secured orders for the RTA division until February 2021 are encouraging,” HLIB analyst Gan Huan Wen wrote in a note today.

Gan said HLIB had maintained its "hold" call for HeveaBoard shares.

"We met with HeveaBoard and came away feeling neutral on the group’s prospects going forward. As the meeting yielded no surprises, we keep [our earnings] forecasts unchanged.

"While HeveaBoard has the factory space to increase RTA production by 20%, we understand that production is bottle-necked by the availability of foreign labour due to the freezing of foreign labour hiring until year end. Additionally, we note that the strengthening of the ringgit [which is currently at RM4.15/US dollar versus the first half of 2020's average of RM4.25/US dollar) does not bode well for HeveaBoard as all their export sales are denominated in USD (US dollar terms),” the analyst said.

According to HeveaBoard’s website, the company and its subsidiaries manufacture and distribute a wide range of particle boards and particle board-based products.

HeveaBoard has claimed that it takes the lead in manufacturing of particle boards, a reconstituted wood panel derived from rubber wood residues.

The firm said its subsidiaries are involved in downstream particle board-based RTA furniture manufacturing, besides trading and distribution of particle boards and wood panel-related products.

On Bursa Malaysia today, HeveaBoard shares were traded three sen or 5.71% lower at 49.5 sen at 11.29am, with a market value of RM280.11 million.

The stock saw some 14 million shares traded.

Chong Jin Hun