Spring art
Market Capital (RM): 83.14m
Spring
Art is a one-stop RTA office and household furniture manufacturer that
caters to 35 countries and expected to generate decent growth moving
forward on back of its in-house design, manufacturing and marketing
team.
One-stop RTA furniture manufacturer. Spring Art is involved in
design and development, manufacturing as well as marketing and sales of
its own furniture products. It analyses its past sales, using the market
data to understand its consumer preference better and keeping abreast
with the trend.
Manufacture of RTA furniture products in flat pack format. Spring
Art’s RTA furniture is sold unassembled in flat pack format (included
with assembly instructions for the end consumer), which reduces storage
space requirements and cost of shipping while being less vulnerable to
damage during transportation.
Wide range of clients and diversified revenue based. Spring
Art’s furniture products are exported to 35 countries, including
distributors, showroom retailers, home finishing chain stores and
e-commerce companies.
Healthy furniture industry outlook. According to Providence
independent market research, Malaysia’s furniture industry and global
demand grew at 2010-2018 CAGR of 8% and 2.9% to RM4.8bn and USD453.0bn,
respectively. With the government’s policy on the implementation of
sustainable forest management, this should bode well for demand for
processed wood products (particleboard, medium density fibreboard (MDF)
and RTA). Also, export-oriented furniture players stand to benefit from
the trade diversion with the imposition of tariffs by the US on selected
Chinese goods, including furniture.
Expansion plans for its RTA manufacturing capacity. Spring Art
intends to purchase machineries (2 CNC panel saw machines, 6 edge
banding machines and 9 CNC woodworking machines) in the next 24 months
to increase its capacity by c.100% to 674k by FY22.
Near term growth from subcontracting. As the new manufacturing
facilities will only commence operation by July 2022, Spring Art has
appointed Bright Showcase Sdn Bhd as subcontractor to undertake the
manufacturing of furniture products in May 2019 for a term of 3 years.
This will allow Spring Art to increase capacity by 49,158 units p.a., or
14.6% of current capacity of 337,016 units. Total purchase orders
within Jun-Sep 2019 stood at 10,921 units.
HIGHLIGHT :
Malaysian furniture association :" furniture sales volumes have been surprisingly strong since the resumption of operation "
Spring
art managing director Jack Lim kok Eng :" seeing a surge in demand for
SOHO furniture on online shopping portal amidst tge COVID19 pandemic "
Comparison market cap
Spring art : RM83.14 mil (expanding RTA, expecting 16% growth this year despite covid19 outbreak)
homeriz : RM178.51mil (stagnant)
Latitude : RM212.8mil (stagnant)
hevea : RM261.16mil (less than 3% growth)
Liihen : RM502.2 mil (less than 3% growth, mature in market)
All stock above posted positive profits
Based on the info we received,
we believe Spring art 2020 Q3 onwards will see strong improvement in
revenue and profits, this company profile give us impression just like
7years ago of latitude and liihen when they are still small-caps
companies,Spring Art will show stronger growth than current liihen,
latitude and other furniture listed companies because as a small-cap
company, it has higher growth potential than the larger-caps liihen and
latitude which already posted nearly mature level
We are strongly recommend on Spring to buy and hold for mid term, you are going to win big
our midterm tp is now upgrade to RM0.5
Disclaimer:
Please be informed that our analysis are solely for education purpose;
it is neither a trading advice nor an invitation to trade.
For trading advice, please speak to your remisier or dealer representative.
You are responsible for your own risk management
Do Your Own Due Diligence (DYODD)
https://klse.i3investor.com/blogs/share4u2019/2020-07-22-story-h1510663783-Spring_Art_Surge_in_demand_in_Online_shopping_for_ready_to_assemble.jsp
For trading advice, please speak to your remisier or dealer representative.
You are responsible for your own risk management
Do Your Own Due Diligence (DYODD)
https://klse.i3investor.com/blogs/share4u2019/2020-07-22-story-h1510663783-Spring_Art_Surge_in_demand_in_Online_shopping_for_ready_to_assemble.jsp
