RHB Research said the company has received positive inquiries from major furniture manufacturers to be on-boarded onto the Wayfair platform.
PETALING JAYA: Despite temporary cost challenges, RHB Research says it remains confident in Synergy House Bhd
’s execution, track record and capabilities in the eCommerce space, especially compared to new entrants.
The research house said the company has received positive inquiries from major furniture manufacturers to be on-boarded onto the Wayfair platform, and Synergy can receive a 10% sales charge from these partnerships.
“Future developments, particularly in securing strategic partnerships, could prompt a re-evaluation of our target price earnings and outlook.”
Wayfair Inc is an American eCommerce company based in Boston, Massachusetts, that sells furniture and home goods online
Synergy House is one of the largest furniture designers and exporters in South-East Asia and with customers across Europe, the United States, the Middle East and South-East Asia.
In terms of costs, RHB Research said despite the company hedging part of its freight costs, container freight rates have more than tripled year-to-date, on top of a delayed cost pass-through to end-customers in the business-to-consumer (B2C) segment.
After a recent briefing with the management, the research house said it also expects administrative expenses to be higher than what was previously pencilled in, with steeper staff costs and additional office rental, in preparation for new B2C platforms and the third engine, the Wayfair eCommerce enabler partnership.
“These factors are likely to negatively impact the financial year 2024 (FY24) forecast overall group margin, as the management expects contributions from the lucrative third engine business to materialise only by FY25.
“Moreover, we foresee the escalating container shortage to affect inventory delivery of the B2C business in the first quarter of 2025, it noted.
