POHUAT (7088) - Pohuat: Seasonally weaker top-line & bottom-line
For QE31/1/2015, Pohuat's net profit dropped 26% q-o-q but rose 29% y-o-y to RM8.2 million while revenue was down 3% q-o-q but rose 10% y-o-y to RM105 million. Revenue declined q-o-q due to lower shipment of furniture from Vietnam - resulted in revenue of RM67.67 million compared to RM72.65 million previously. The peak shipment in the preceding quarter coincided with the inventory built-up for US distributors prior to the Christmas/New Year seasonality peak. The Malaysian operation achieved a revenue of RM34.48 million, which was broadly similar to the previous quarter due to the less cyclical nature of the office furniture segment.
As a result of lower revenue, the Group achieved a lower profit before tax of RM10.00 million as compared to RM13.34 million previously. The lower profitability from the Vietnamese operations was mainly due to the higher absorption of fixed manufacturing against a lower level of production following the pre-Christmas/New Year festive peak in the preceding quarter.
Pohuat's prospects going forward may be affected by slowing demand -there are tentative signs of slowdown in US housing market (here) - and a possible reversal of USD - if the expected interest rate hike is deferred (here).
Table 1: Pohuat's last 8 quarterly results
Chart 1: Pohuat's last 33 quarterly results
Valuation
Pohuat (closed at RM2.30 yesterday) is now trading at a PE of 9.6 times (based on last 4 quarters' EPS of 24.02 sen). At this PER, Pohuat is deemed fairly valued.
Technical Outlook
Pohuat, which is in a sharp uptrend, has een volatile trading in the past 4-5 weeks. This could be signs of profit-taking since the stock has risen substantially over the past 2 years.
Chart 2: Pohuat's weekly chart as at Mar 19, 2015 (Source: ShareInvestor.com)
Chart 3: Pohuat's monthly chart as at Mar 19, 2015 (Source: ShareInvestor.com)
Conclusion
Based on good financial performance (albeit a drop in the last quarter), reasonable valuation & positive technical outlook, Pohuat could be a good stock for medium-term investment. However, some profit-taking is advisable at this stage given Pohuat's sharp rise in the past 2 years.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Pohuat.
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