Gradual improvement in exports orders. Both furniture companies under our coverage, Poh Huat Resources and Homeritz Corporation, reported unexpectedly strong results in the recent quarter. This performance was driven primarily by a YoY rise in export orders as US customers replenished their inventories. According to the DOSM, Malaysia's furniture exports increased by an average of 18% YoY from January to March 2024, compared to the same period the previous year. Looking ahead, we anticipate export sales to strengthen steadily, propelled by expansion into new markets through proactive engagement in international furniture exhibitions.
We maintain a Neutral outlook on the furniture sector nonetheless, expecting gradual growth in export sales volume and strengthened USD to benefit local manufacturers. However, the US Federal Reserve's recent decision to reduce expectations of future rate cuts is likely to lead to prolonged elevated mortgage rates. Moreover, a slowdown in new home sales indicated by recent data suggests a longer recovery period for furniture demand.
Source: PublicInvest Research - 26 Jun 2024