POH HUAT, a leading furniture manufacturer, was previously highlighted as InsiderAsia’s Stock of the Day on December 19 at RM1.25. The stock closed at RM1.56 yesterday, up 6.8% for the day and 24.8% since the stock was first featured three weeks ago. 

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

The company has manufacturing plants in Vietnam, Malaysia and South Africa. Vietnam has the advantage of lower labour costs, shipping some 62.6% of total sales while the local operations focus on higher-value products. 

Poh Huat has stayed consistently profitable throughout the years, even during the downturn faced by the industry. 

Revenue for FYOct2014 grew 5.4% y-y to RM377.2 million while net profit expanded an outsized 42% to RM23.8 million, due primarily, to the absence of impairment losses recorded in FY2013. Cash build-up over the years has also pared gearing from 11.5% in FY2010 to net cash of RM18.1 million as at end-October 2014. This translates to 17 sen per share, or 11.7% of the current share price. 

The stock trades at attractive valuations of 0.9 times book and a trailing 12-month P/E of just 6.6 times. In addition, the company has consistently paid dividends, averaging 2 sen per share for FY10-FY12. Dividends were raised to 5 sen per share in FY13 and FY14, with a decent yield of 3.4%. The stock will trade ex-entitlement for a second interim dividend of 2 sen per share on 6 Jan 2015.  

Notably, Lim Pei Tiam@Liam Ahat Kiat, a substantial shareholder and director, has been buying from the open market since June, raising his direct and indirect holdings to 13.12% and 1.39%, respectively.

This article first appeared in The Edge Financial Daily, on January 6, 2015.