Insider Asia’s Stock Of The Day: Poh Huat Resources Holdings

By InsiderAsia / InsiderAsia   | December 19, 2014 : 10:09 AM MYT   http://www.theedgemarkets.com/my ... -resources-holdings

Poh Huat Resources Holdings Bhd
Valuations are attractive for furniture manufacturer, Poh Huat. Its shares are trading at 0.8 times book value of RM1.54 and trailing 12-month P/E of only 5.7 times.

The company is a pioneer in high-tech, eco-friendly manufacturing, using natural veneer, solid and reconstituted wood-panels in lieu of timber. Its furniture range is marketed under ‘AT Office Systems’ and ‘AT Home Systems’. Despite the volatility of the wood furniture industry, Poh Huat stayed profitable. 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. Operations in South Africa are small.

The company is benefiting from the unfolding economic recovery in the US, its largest export market that accounted for some 70% of sales. Other key markets include Australia, New Zealand, UK, Canada, Middle East and Asia.

Revenue for 9MFYOct14 grew 4.8% y-o-y to RM269.1 million while net profit expanded twofold to RM12.8 million, due, primarily, to the absence of impairment losses recorded in 9MFY13. Cash build-up over the years has pared gearing, from 11.5% in FY10 to net cash of RM3.9 million as at end-July 2014.

The company has consistently paid dividends, averaging 2 sen per share for FY10-FY12. In line with improved earnings and cash position, dividends were raised to 5 sen per share in FY13. That translates into a net yield of 4% based on prevailing share price of RM1.25. For 9MFY14, dividends totalled 5 sen per share. The stock will trade ex-entitlement for a second interim dividend of 2 sen per share on 6th January 2015.  

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

This article first appeared in The Edge Financial Daily, on December 19, 2014.