PETALING JAYA: Poh Huat Resources Holdings Bhd is expected to receive more sales orders in the coming months with demand recovery for its furniture, says TA Research.
The US furniture market is on a slow recovery trajectory following the reduction of excess inventories and the potential interest rate cut could help revive the US housing market, noted the brokerage firm.
Given a brighter outlook in the US furniture market, TA Research has tweaked its target price higher from RM1.40 to RM1.57 a share, based on nine-month 2025 earnings.
It has maintained a “hold’’ call on the stock and retained its financial year 2024 (FY24) to FY26 earnings forecasts.
The group’s balance sheet remained solid with zero debt and a net cash position of RM290mil or RM1.05 a share, TA Research added.
Excluding a foreign exchange loss of RM0.3mil, Poh Huat’s first quarter FY24 (1Q24) core profit of RM10.6mil came in within expectations, accounting for 23.2% and 24.7% of its and consensus full-year estimates, respectively, it said.
Year-on-year, 1Q24 core profit fell by 27.8% to RM10.6mil despite revenue increasing by 9.7% to RM131mil.
The weaker bottom line was largely due to lower gross margin as a result of higher overtime expenses as well as rising sales and distribution and administrative costs.
It said the revenue growth was mainly driven by gradual demand recovery from the United States, given that the US importers started to replenish the inventories.
It added that quarter-on-quarter, 1Q24 core profit surged by 166.1% to RM10mil while revenue was 23.8% higher at RM131mil.
The stronger earnings performance was primarily attributed to higher sales orders as well as better margins from its Vietnam operations, thanks to improved factory utilisation rate and higher average selling prices for certain products.