Recently furniture manufacturer has been reporting fairly good results. This has caught the attention of investors. Companies like Latitude tree, Liihen and Poh Huat had a good stock price run up.
We will be taking a look at Poh Huat Resources a Muar base furniture manufacture to see if it is worth buying at this current prices.
click at the following icon for the Analysis.
A general summary will be to find at current prices and base on latest quarterly report figures, it is deem at fair value (Assuming cost of capital is at 15%, only a strong company with big businesss moat or monopoly can assume to have a cost of capital close to the Malaysian Government bond rate).
Hence at this prices, there is no safety of margin. Opportunity is provided by any EPS upside revision in the coming results. Down side risk is, if the results are poor. Looking at the results coming out for furniture producers, bias is to the upside.
Perhaps a good return for the short term. However for the longer term, past records shows it is vulnerable to sudden change/down turn in particular with it's low net margins.