Spring Art Holdings Bhd

Leveraging on shift in working environment

• 100% export oriented furniture manufacturer with products sold mostly to countries in the Middle East and Asia Pacific countries.

• Rapid shift of companies moving to working from home, in an effort to maintain business continuity ensures higher demand. Meanwhile, Spring Art will expand product range by releasing four new collections annually, focusing on living room furniture and bedroom furniture.

• Technically, price has formed a flag-formation breakout above the daily EMA20 level which share price may propel higher towards the next resistances at RM0.265-0.275 with long term target at RM0.30.

Trading Catalyst

• Spring Art Holdings Bhd (Spring Art) started off in 1996 at Muar, Johor is a 100% export oriented furniture manufacturer with products sold mostly to countries in the Middle East and Asia Pacific countries such as Saudi Arabia, United Arab Emirates and India. To-date Spring Art owns 3 facilities and operates 6 production lines with a total annual production capacity of 337,016 units of furniture.

• We like Spring Art for their position as a ready-to-assemble (RTA) furniture manufacturer and designer that capitalise on the rising demand from e-commerce platform. The Covid-19 pandemic resulted in the implementation of Movement Control Order saw increase in online shopping for products including RTA furniture products worldwide. This is premised to the rapid shift of companies shifting into working from home, in an effort to maintain business continuity.

• Moving forward, the upcoming expansion of new factory that is schedule to be ready in July 2022 will double its existing production capacity in order to meet the rising demand from North American and European markets. Spring Art also aims to expand its product range by releasing four new collections annually, focusing on living room furniture and bedroom furniture according to consumer general preferences. Understandably, RTA furniture packed in a flat-pack format, easy to transport and assemble by customers.

Technical Outlook

• Technically, share price has been establishing the higher high and higher low formation over the past couple of months. The move resulted in the uptrend intact formation established since end-August 2020. Price has formed a flag-formation breakout above the daily EMA20 level which may propel share price higher towards the next resistances at RM0.265-RM0.275 with long term target at RM0.30. Support is pegged at RM0.23 and cut loss is located at RM0.225.

Source: Mplus Research - 7 Sept 2020