Poh Huat Resources Holdings Bhd 
(March 20, RM2.30)
Maintain buy with unchanged target price of RM2.62. Poh Huat Resources Holdings Bhd’s first quarter financial year 2015 (1QFY15) net profit of RM8.2 million came in within our expectations, accounting for 26.9% of our full-year estimate.

Year-on-year (y-o-y), 1QFY15 net profit jumped 29.5% to RM8.1 million as revenue increased by 10% to RM105.1 million, and profit before tax (PBT) margin expanded by 2.1% to 9.5%. 

The better results were due to operational improvements in the Malaysian operations, and favourable US dollar movement against the ringgit. 

The Malaysian operations saw a 169.7% jump in PBT to RM4.1 million while operations in Vietnam recorded a 10.1% increase in PBT to RM5.8 million.

Quarter-on-quarter (q-o-q), net profit declined 26% as the PBT derived from the Vietnam operations decreased by 43.8% to RM5.8 million. 

The production level in Vietnam dropped after the pre-Christmas and New Year peak period in the immediate preceding quarter. 

The operations in Malaysia, which focus on the office segment, were less cyclical in nature.

The ex-date for FY14’s final dividend of three sen per share was fixed on May 6 this year.

With key leading indicators in the United States such as the US consumer confidence index, US housing starts and US unemployment rate pointing to the better economy, we expect higher shipments of Poh Huat’s furniture to its main market in North America. 

This should translate into a better bottom line for the group in FY15.

Having majority of the sales denominated in foreign currencies, mainly the US dollar, we expect further strengthening of the US dollar against the ringgit to be a boost to the group’s bottom line. — TA Securities, March 20

This article first appeared in The Edge Financial Daily, on March 23, 2015.