Mobilia Holdings Bhd (MOBILIA) is principally involved in the design and manufacturing of home furniture, which comprises dining room furniture, living room furniture and bedroom furniture. Besides manufacturing furniture according to its own design and specifications, MOBILIA also provides made-to-order options based on customised specifications by its customers. MOBILIA's home furniture is manufactured and packaged either as fully-assembled furniture products or ready-to-assemble (flat packed) furniture products. The furniture is designed and manufactured for customers to be labelled under their own brand names. MOBILIA's customers primarily comprise distributors and retailers of home furniture. Apart from that, MOBILIA also sells its furniture to an agent who exclusively promotes and sells MOBILIA's products to their customers. The group's products are sold locally and exported overseas.

Moving forward, MOBILIA intends to expand its current manufacturing plant to support its long term business growth and purchase additional machinery to increase automation in its manufacturing process. In addition, MOBILIA intends to expand its range of home furniture through its continuous design and development efforts. We derive a fair value of RM0.28 based on a 10x PE multiple to its FY21F EPS of 2.8sen. The IPO is expected to raise approximately RM13.8m from the issuance of 60.0m new shares. Besides utilising 42.0% of the proceeds for construction of new buildings, 9.4% and 13.8% of the proceeds are allocated for purchase of new machineries and working capital respectively.

• Growth drivers. MOBILIA’s growth will be dependent on: i) expansion of its current manufacturing plant, ii) purchase of additional machinery, iii) expansion of its range of home furniture, and iv) expansion of its customer base and export markets.

• Competitive strengths. MOBILIA’s competitive strengths include: i) offering a wide range of home furniture with consistent launch of new designs, ii) having a diversified market base, iii) having an established industry network, iv) adoption of automation in its manufacturing process, v) maintaining stringent quality control procedures, and vi) having an experienced and hands-on management team.

• Catalysts. Key drivers may include: i) steady growth in population, ii) increasing urbanisation, iii) recovering global economy condition, and iv) gradual growth in global furniture consumption over the long run.

• Key risks. Key downside risks, among others, include i) highly competitive and fragmented nature of the industry, ii) dependency on two largest major customers, iii) lack of long-term contracts, iv) dependency on the availability of foreign workers for its manufacturing activities, and v) foreign exchange fluctuation.

Source: PublicInvest Research - 8 Feb 2021