Affin Hwang maintains buy on Poh Huat, TP of RM1.71

KUALA LUMPUR: Affin Hwang Capital research expects demand for Poh Huat Resources Holdings Bhd's furniture products to remain resilient as the group introduces more unique and differentiated products.

It said this was despite competition intensifying with more factories operating in Vietnam, resulting in suprlus capacity and price competition.

"We maintain our buy rating on the stock with an unchanged target price of RM1.71," it said.

In a morning note, the research house said Poh Huat's 68.7% higher year-on-year core net profit of RM15.4mil in 1QFY19 came in broadly within its expectations. 

The group poseted a 21.7% higher 1QFY19 revenue of RM197.1mil y-o-y and a more than 100% higher net profit of RM15.3mil.

Sales in Malaysia were boosted by demand for its panel-based furniture while shipments from its Vietnam operations increased on the back of higher orders.

"The EBITDA margin for 1QFY19 improved by 1.6ppt yoy to 10.3%, partly due to lower raw-material costs and better manufacturing efficiency. 

"Adjusting for one-offs, core earnings came in largely within our expectations at RM15.4m (+68.7% yoy)," it said.