Shares in furniture makers rally on stronger US dollar

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KUALA LUMPUR: Shares in furniture makers continued their rally yesterday amid expectations that they will benefit from the stronger US dollar — in particular companies that are exporting to the United States.

A check on their historical prices showed that furniture stocks have been trending upward since the middle of last month, led by Poh Huat Resources Holdings Bhd, which saw an appreciation of 39% during the period.

Poh Huat closed up 15 sen or 9.55% to RM1.72 yesterday, with 1.76 million shares traded, giving it a market capitalisation of RM167.56 million. Poh Huat was previously highlighted as Insider Asia’s Stock of the Day on Dec 19 at RM1.25.

When contacted yesterday, a Poh Huat spokesman told The Edge Financial Daily that a possible driver of the recent surge in the company’s share price was due to the weakening ringgit against the greenback.

Insider Asia noted that Poh Huat offers investors an attractively-priced exposure to the unfolding US economic recovery and strengthening dollar, with exports to the US accounting for some 70% of its sales. Other key markets include Australia, New Zealand, the United Kingdom, Canada, the Middle East and Asia. 

The company has manufacturing plants in Vietnam, Malaysia and South Africa. 

Insider Asia also pointed out that Poh Huat has stayed consistently profitable throughout the years, even during the downturn faced by the industry. 

Apart from Poh Huat, share prices of Evergreen Fibreboard Bhd and Latitude Tree Holdings Bhd have risen 32% and 22% respectively since Dec 15, 2014.

The medium density fibreboard maker’s share price closed five sen or 7.87% higher to 68.5 sen yesterday, with 5.15 million shares traded. Its market cap stood at RM325.74 million.

Latitude Tree’s stock jumped 16 sen or 4.13% to end the day at RM4.03, valuing it at RM376.19 million. It was also Insider Asia’s stock pick on Oct 30, 2014, which noted that the company has been consistently profitable since its listing in 2001, and as a result, has built up a large cash pile.

Insider Asia added that Latitude Tree exports over 99% of its products, with the US accounting for 90% of its sales.

Lii Hen Industries Bhd, whose share price climbed 17% in less than a month, advanced 15 sen or 5.23% to close at RM3.02 yesterday, giving it a market cap of RM172.2 million.

Shares in Heveaboard Bhd closed up 3.47% to RM1.79, with a market cap of RM178.01 million, while Mieco Chipboard Bhd settled 3.95% higher at 39.5 sen, giving it a market cap of RM82.95 million. 

Signature International Bhd’s stock closed unchanged at RM1.88, with a market cap of RM225.52 million.

An analyst, who declined to be named, said the valuation of the counters which remains relatively low also contributed to the renewed enthusiasm for the furniture makers.

“Most of the furniture stocks on Bursa [Malaysia] have a PER (price-earnings ratio) of less than 10 times,” the analyst told The Edge Financial Daily.

The PER of seven furniture makers listed on Bursa Malaysia ranges from 5.39 times to 7.08 times based on their closing prices yesterday, except for Signature International which has a PER of 10.03 times.

 

This article first appeared in The Edge Financial Daily, on January 8, 2015.