Lower demand for furniture to affect Homeritz

PETALING JAYA: Despite a commendable financial year 2022 (FY22), analysts are cautious about Homeritz Corp Bhd’s outlook with the current elevated inflationary environment likely to reduce consumer demand for furniture.

Homeritz manufactures and exports a complete range of upholstered home furniture.

For the fourth quarter ended Aug 31, 2022, the company reported a net profit of RM10.96mil, from RM250,000 a year ago.

This brought FY22 profitability to RM40.98mil or up 83.5% from the previous year.

Hong Leong Investment Bank (HLIB) Research said the results were within the expectations of the firm but exceeded consensus for full year forecasts.

“However, due to the aggressive interest rate hikes in the United States and Europe denting home sales and hence furniture demand, we cut our FY23/24 forecasts by 15% to 15.1%.” it said in a note to clients.

Following this HLIB has downgraded the stock to a “hold” with a lower target price of 53 sen pegged to a lower price-earnings multiple of eight times.

On the supply side, it noted that Homeritz has started to see the return of foreign labour, albeit at a small scale, since August this year.

More foreign workers are expected to be recruited in the coming months, which will coincide with the group’s expansion plans in the Muar furniture park in Johor by end-2022. The research house said the furniture maker would benefit from the continued strength of the US dollar as the Federal Reserve continues to raise rates.

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

Next In Business News

Axiata posts lower 1Q net profit of RM60.03mil
IJM Corp sees encouraging rebound in its business operations
LSH Best Builders, Service Master to operate KL Tower via 20-year concession
Super Ring maker Oriental Food posts over 4-fold profit jump in 4Q24
WCT returns to the black in 1Q with RM16mil net profit
FBM KLCI hits intraday low; Lagenda Properties dives on MACC probe
BOJ policymaker hints at rate hike if yen's impact on inflation is big
Alliance Bank and SkyWorld team up to offer enhanced home financing
E&O to launch projects with RM1.63bil GDV
Oil advances as major producers expected to keep output cuts in place

Others Also Read