For QE31/7/2015, Pohuat's net profit rose 135% q-o-q or 174% y-o-y to RM10.6 million while revenue rose 17% q-o-q or 26% y-o-y to RM112 million. Revenue increased q-o-q due to the seasonally higher orders of furniture from US importers amidst improving business sentiments and consumer confidence in the US. Profits increased q-o-q due to strong performance from the Vietnam operations which reported a profit before tax of RM7.10 million (due to better overhead absorption from the higher level of production). The profitability of the Malaysian operations similarly improved due to the continued efforts to focus on operational efficiency and selling higher value items together with the rising US Dollar exchange rate.
Table 1: Pohuat's last 8 quarterly results
Chart 1: Pohuat's last 35 quarterly results
Valuation
Pohuat (closed at RM2.90 yesterday) is now trading at a PE of 9 times (based on last 4 quarters' EPS of 32 sen). At this PER, Pohuat is deemed fairly valued.
Technical Outlook
Pohuat is in an upward channel for the past 2 & 1/2 year. The support & resistance are RM2.00 & RM3.50, respectively.
Chart 2: Pohuat's weekly chart as at Sept 14, 2015 (Source: ShareInvestor.com)
Chart 3: Pohuat's monthly chart as at Sept 14, 2015 (Source: ShareInvestor.com)
Conclusion
Based on good financial performance, reasonable valuation & positive technical outlook, Pohuat could be a good stock for medium-term investment. However, some profit-taking is advisable if Pohuat share price rises to the RM3.50 level.
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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