Pohuat's net profit increased further

Poh Huat Resources Holdings Bhd ('Pohuat') is involved in the manufacture & sale of furniture. Its manufacturing operations are located both in Malaysia and Vietnam.

On December 31st, Pohuat reported its results for QE31/10/2007 (or, 4Q2007), where its net profit increased by 74.0% q-o-q or 50.1% y-o-y to RM8.0 million. Its turnover has increased by 14% to RM107 million from a year ago, though it is hardly changed from the preceding quarter.

The increased turnover in the last 2 quarters is attributable to higher output from its Vietnam factories (and, maybe benefiting from positive seasonal effect as group's turnover is normally higher in the 3rd & 4th quarters). With higher capacity utilization & better production efficiency achieved by its Vietnam operations as well as a change in product mix (that emphasized higher profit margin products), the group's net profit was given a big boost.

If Pohuat can maintain its current level of profitability, its earning may increase to 20-30 sen per share in FY2008. Assuming a EPS of 25 sen for FY2008, Pohuat is now trading at a forward PE of 3.7 times (basing on its price of RM0.915 as at 11.00 am today).



The monthly chart shows that Pohuat has broken above its long-term downtrend line at the RM0.63-65 as well as the horizontal resistance of RM0.75. The next horizontal resistance is at RM0.95.


Chart: Pohuat's monthly chart as at December 31 (courtesy of Quickcharts)

Based on improved financial performance & bullish technical breakout, Pohuat could be a good medium-term BUY.