KUALA LUMPUR (July 29): Shares of Homeritz Corp Bhd (KL:HOMERIZ) rose to their highest in six weeks as investors cheered the furniture manufacturer's better-than-expected third quarter results though analysts remained cautious.
Homeritz climbed as much as 3.4% or two sen to 60.5 sen, its highest since June 18, 2024. Trading volume totalled 210,900 shares at 9.20am. At the last price, Homeritz has a market capitalisation of RM280.63 million.
Public Investment Bank and Hong Leong Investment Bank (HLIB), the two research houses covering Homeritz, maintained their ‘hold’ calls on the stock due to limited upside to share price.
“While we expect an uptick in sales volume driven by the upcoming year-end festival season, we remain conservative about the group’s near-term trajectory due to prevailing high interest rates and persistent inflationary pressure,” said Public Investment Bank.
The research house raised its earnings forecast by 6% to account for the latest results and now expects Homeritz to make RM33.1 million in core net profit. Public Investment Bank's target price for the stock is 61 sen.
Shares of Homeritz have risen nearly 18% so far this year as investors bet on rate cuts by the Federal Reserve (Fed) which would spur the recovery in demand for homes in the US, a key market that accounts for a large chunk of the company’s exports.
“Moving forward, should the Fed begin to cut rates in 2H2024 (second half of 2024), a potential recovery in the US housing market should lead to higher furniture demand and further benefit local furniture makers,” said HLIB.
For now, the research house noted that the furniture manufacturer’s current valuation is “fair”, trading close to its five-year mean of eight times forward earnings. HLIB's target price for Homeritz is 62 sen.
Any downside risk to share price, however, should be supported by the group’s healthy balance sheet with net cash of RM189.1 million or 40.8 sen per share, nearly 70% of its market capitalisation, HLIB added.