Poh Huat to benefit from ongoing trade war

KUALA LUMPUR: The ongoing trade war between the US and China is turning Malaysian furniture makers more competitive than those in China, says Affin Hwang Capital Research.

It said local furniture manufacturer Poh Huat Resources Holdings Bhd 's revenue is expected to increase in FY19-20E on the back of strong furniture product demand, especially from the US.

The research house lifted its FY1920E core earnings for Poh Huat by 4.5%/3.4% due to stronger US demand, partly offset by rising production costs from higher raw material and labour costs.

It maintained its buy call on the counter with a higher target price of RM1.71.

"The group has been updating and adjusting its product mix, mainly to meet the change in consumer preferences towards the middle and affordable products from high-end products previously," said Affin Hwang.

In Vietnam where competition is intense, Poh Huat has been trying to introduce more unique and differentiated furniture products.

Affin Hwang added that the group is in talks with an Australian company that sells furniture online.

"The contribution from this venture is likely to be small, nevertheless, if Poh Huat manages to purchase the Australian company, this could be the group’s first foray in tapping the Australian furniture market."

Analyst Reports