• Operates 5 factories sitting on a built-up area of 510,000 sqf, supported by 850 employees with revenue contributed by more than 50 countries across the globe.

• Benefitting from the US-China trade war following the trade diversion to manufacturers in the South East Asia countries due to import tariffs being placed in Chinese furniture makers.

• Healthy balance sheet with net cash position at 73.8m as of 3QFY20. Prospective dividend yields are relatively decent at 4.1% for both FY20f and FY21f respectively.

• Technically, the flag-formation breakout above RM0.725 signals for further upside towards the next resistances at RM0.77-RM0.825 with long term target at RM0.87.

Trading Catalyst

• Homeritz Corporation Bhd (Homeritz) is involved in manufacturing of upholstered home furniture at Muar, Johor under own brand ‘Eritz’ as well as OEM basis. Homeritz currently operates 5 factories sitting on a built-up area of 510,000 sqf, supported by 850 employees. Homertiz derived their revenue mainly from overseas; >90% of total revenue was contributed by more than 50 countries across the globe.

• We reckon that Homeritz could be benefitting from the US-China trade war following the trade diversion to manufacturers in the South East Asia countries due to import tariffs being placed in Chinese furniture makers. At the same time, there is also an increasing trend on work from home (WFH) undertaken by corporations across the globe to contain the spread of Covid-19.

• We note that Homeritz has been operating in a lean balance sheet over the years with net cash position standing at 73.8m as of 3QFY20. Accompanied by the profitable business over the years, Homeritz has been rewarding shareholders since the listing in 2010. Based on consensus, we gather that the prospective dividend yields are relatively decent at 4.1% for both FY20f and FY21f respectively.

Technical Outlook

• Technically, price has found some stability after the recent pullback towards the daily EMA20. Price subsequently rebounded, forming a bullish candle to close above the daily EMA9 level accompanied by improved volumes. The flag-formation breakout above RM0.725 signals for further upside towards the next resistances at RM0.77-0.825 with long term target at RM0.87. Support is pegged at RM0.68 and cut loss is located at RM0.675.

Source: Mplus Research - 30 Sept 2020