CGS-CIMB Research analyst William Tng is positive on Koda as he undertakes a preliminary assessment on the SGX-listed furniture manufacturer in an unrated report dated June 21.
Koda, which was founded in 1972, is a sole proprietorship that deals in furniture. The business began as a wooden cabinet maker, and has expanded its range of offerings to include solid-wood dining, living room, as well as bedroom furniture.
See also: Koda posts 2% drop in FY19 earnings to $7.4 mil; declares 2 cents final and special dividend
The company now has its own retail brand Commune, which was established in 2011. The latter targets high-end customers all across Asia operating stores in Singapore, Malaysia, the Philippines, Hong Kong, and China.
In his report, Tng noted that the company’s net profit of US$4.8 million ($6.5 million) in the 1HFY2021 ended December has already exceeded its net profit of US$4.3 million for the FY2020. Koda’s management attributed the higher sum to an increase in demand for furniture due to the work-from-home arrangements arising from the Covid-19 lockdown measures.
Its management added that it hopes that the current work-from-home arrangement will continue, as it has “led to healthy orders from its key export markets”.
Looking ahead, the group says it is confident that it can remain profitable in the FY2021 due to improved manufacturing techniques making producing both more productive and cost-efficient.
That said, management believes that a resurgence of Covid-19 cases or the US-China trade war might affect the future success of Koda.
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Koda is currently trading at a 1.4% discount to its official book value of 73.5 cents as of end-December 2020. Koda has also been in a net-cash positive position for over the past 5 years. For the FY2020, Koda’s price-to-earnings ratio (P/E) was 10.3 times while its dividend yield was 1.72%.
As this is an unrated report, there are no financial forecasts, target price estimates, or recommendations on the counter.
As of 1:06 pm, shares in Koda up 2.5 cents or 3.52% at 73.5 cents.
Photo: Koda
