Highlights

share4u2019

Author: share4u2019   |   Latest post: Tue, 18 Aug 2020, 9:18 PM

 

Spring Art -Surge in demand in Online shopping for ready-to-assemble

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Spring art
 
 
Market Capital (RM): 83.14m
 
 
Spring Art is a one-stop RTA office and household furniture manufacturer that caters to 35 countries and expected to generate decent growth moving forward on back of its in-house design, manufacturing and marketing team. 
 

One-stop RTA furniture manufacturer. Spring Art is involved in design and development, manufacturing as well as marketing and sales of its own furniture products. It analyses its past sales, using the market data to understand its consumer preference better and keeping abreast with the trend.

Manufacture of RTA furniture products in flat pack format. Spring Art’s RTA furniture is sold unassembled in flat pack format (included with assembly instructions for the end consumer), which reduces storage space requirements and cost of shipping while being less vulnerable to damage during transportation.

Wide range of clients and diversified revenue based. Spring Art’s furniture products are exported to 35 countries, including distributors, showroom retailers, home finishing chain stores and e-commerce companies.

Healthy furniture industry outlook. According to Providence independent market research, Malaysia’s furniture industry and global demand grew at 2010-2018 CAGR of 8% and 2.9% to RM4.8bn and USD453.0bn, respectively. With the government’s policy on the implementation of sustainable forest management, this should bode well for demand for processed wood products (particleboard, medium density fibreboard (MDF) and RTA). Also, export-oriented furniture players stand to benefit from the trade diversion with the imposition of tariffs by the US on selected Chinese goods, including furniture.

Expansion plans for its RTA manufacturing capacity. Spring Art intends to purchase machineries (2 CNC panel saw machines, 6 edge banding machines and 9 CNC woodworking machines) in the next 24 months to increase its capacity by c.100% to 674k by FY22.

Near term growth from subcontracting. As the new manufacturing facilities will only commence operation by July 2022, Spring Art has appointed Bright Showcase Sdn Bhd as subcontractor to undertake the manufacturing of furniture products in May 2019 for a term of 3 years. This will allow Spring Art to increase capacity by 49,158 units p.a., or 14.6% of current capacity of 337,016 units. Total purchase orders within Jun-Sep 2019 stood at 10,921 units.

 

HIGHLIGHT :

Malaysian furniture association :" furniture sales volumes have been surprisingly strong since the resumption of operation "
 
 
 
Spring art managing director Jack Lim kok Eng :" seeing a surge in demand for SOHO furniture on online shopping portal amidst tge COVID19 pandemic "
 
 
 
Comparison market cap
 
Spring art : RM83.14 mil   (expanding RTA, expecting 16% growth this year despite covid19 outbreak)
homeriz : RM178.51mil   (stagnant)
Latitude : RM212.8mil (stagnant)
hevea : RM261.16mil  (less than 3% growth)
Liihen :  RM502.2 mil (less than 3% growth, mature in market)
 
All stock above posted positive profits 
 
 
 
Based on the info we received, we believe Spring art  2020 Q3 onwards will see strong improvement in revenue and profits, this company profile give us impression just like 7years ago of latitude and liihen when they are still small-caps companies,Spring Art will show stronger growth than current liihen, latitude and other furniture listed companies because as a small-cap company, it has higher growth potential than the larger-caps liihen and latitude which already posted nearly mature level
 
 
 
 
 
We are strongly recommend on  Spring to buy and hold for mid term, you are going to win big
our midterm tp is now upgrade to RM0.5
 
 
 

Disclaimer:

Please be informed that our analysis are solely for education purpose; it is neither a trading advice nor an invitation to trade.
For trading advice, please speak to your remisier or dealer representative.
You are responsible for your own risk management
Do Your Own Due Diligence (DYODD)

 

 

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Labels: SPRING

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Chart Stock Name Last Change Volume 
SPRING 0.245 +0.01 (4.26%) 5,672,700 

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