Recently, cross-border e-commerce and Ready-To-Assemble (RTA) furniture exporter Synergy House Berhad (SYNERGY, 0279) announced outstanding financial performance, with continuous growth in revenue and net profit, reaching historic highs. Before delving into these achievements, let us first briefly understand the background and operations of SYNERGY.

Established in 1990, SYNERGY primarily engages in the design, development, and sale of RTA furniture, with manufacturing outsourced to third-party manufacturers. As a forward-thinking furniture company, SYNERGY adopts a Business-to-Consumer (B2C) model, selling furniture and home products through its own channels and third-party e-commerce platforms such as Lazada, Shopee, Amazon, and Wayfair. Additionally, the company utilizes a Business-to-Business (B2B) sales model to distribute RTA furniture to online retailers, chain-store retailers, and wholesalers.

The majority of SYNERGY's revenue comes from overseas markets. According to data from the 2022 fiscal year, the company's largest market is the United Kingdom, accounting for approximately 42.40% of total revenue, followed by the United States (39.01%), the United Arab Emirates (11.62%), and other regions (1.63%).

It is worth noting that SYNERGY was listed on the Malaysian Stock Exchange's ACE Market on June 1, 2023.

Revenue Comparison (YoY N/A, QoQ +31.09%)

As SYNERGY has been listed for less than a year, there is no year-on-year comparison data available.

For the fourth quarter ending December 31, the company achieved approximately RM90.77 million in revenue, representing an increase of approximately 31.09% compared to the previous quarter's RM69.24 million.

This growth can be attributed to increased revenue contributions from both the B2B and B2C segments, particularly in the United States and the United Kingdom. Quarterly reports indicate that B2C revenue increased by approximately RM18.10 million, or about 68.30%, while B2B revenue increased by RM3.50 million, or approximately 8.00%.

During this quarter, the majority of market revenue came from the United States, contributing approximately RM55.37 million, followed by the United Kingdom with approximately RM24.15 million. Subsequently, the United Arab Emirates, Malaysia, and Asia (excluding Malaysia) contributed approximately RM8.11 million, RM2.24 million, and RM0.73 million in revenue, respectively. The remaining RM0.15 million in revenue came from other regions.

Overall, SYNERGY achieved approximately RM270.17 million in revenue for the 2023 fiscal year, representing a growth of approximately 39.19% compared to the 2022 fiscal year.

Net Profit Comparison (YoY N/A, QoQ +27.32%)

Driven by increased sales in the B2B and B2C segments, the company's net profit increased by approximately 27.32% quarter-over-quarter, reaching approximately RM10.27 million.

However, the company faced approximately RM1.30 million in foreign exchange losses during this quarter, partially offsetting the profit growth.

In conclusion, SYNERGY achieved approximately RM27.14 million in net profit for the 2023 fiscal year, representing a significant increase of approximately 63.49% compared to approximately RM16.60 million in the 2022 fiscal year.

Outlook

The company will continue to focus on increasing B2C business sales through various sales strategies, including expanding customer reach on other third-party e-commerce platforms, increasing revenue through additional advertising and promotional activities, and establishing e-commerce fulfillment centers in Malaysia.

Additionally, the company plans to leverage artificial intelligence (AI) technology to improve efficiency and obtain the latest market information, ensuring competitiveness in the rapidly evolving e-commerce landscape. Therefore, management holds an optimistic view on SYNERGY's potential in the global furniture e-commerce market and its long-term growth and expansion prospects.

With SYNERGY's current price-to-earnings ratio of approximately 15.80 times, what are your thoughts on its prospects, dear readers?

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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