KUALA LUMPUR (April 7): Shares in furniture manufacturer Poh Huat Resources Holdings Bhd (KL:POHUAT) fell to their lowest level in 32 months on Monday, after analysts flagged downside risks to the group’s earnings outlook from the imposition of reciprocal tariffs by the United States.

The counter slipped four sen or 3.42% to RM1.13 — its weakest level since July 18, 2022 — valuing the company at RM314.48 million. Trading was thin, with 9,500 shares transacted as at 9.40am.

Poh Huat, which derives over 90% of its export revenue from the US, is seen as particularly vulnerable to any tariff adjustments, Public Investment Bank and TA Securities — the only two research houses covering the stock — said in separate notes on Monday. 

TA Securities warned that higher tariffs could slow down sales, as US buyers might cut back on purchases due to higher import costs, leading to order cancellations or smaller orders.

“Poh Huat may face some margin pressure, as it might need to absorb part of the tariff burden or offer discounts to maintain competitiveness,” TA Securities added. The house has downgraded its call on the stock from “hold” to “sell”, and slashed its target price to RM1.08, citing “elevated uncertainties” and “earnings risks” ahead for the furniture sector.

It noted that the group’s Malaysian operations may be less impacted than its Vietnam operations, given that tariffs on Malaysia remain comparatively lower than those imposed on major furniture-exporting nations like China and Vietnam. Together, China and Vietnam account for more than 50% of total US furniture imports.

Public Investment Bank noted that high inflation and the US Federal Reserve’s cautious approach to rate cuts in 2025 could reduce demand. Additionally, new home sales in the US dropped to an annual rate of 657,000 units in January 2025, due to high mortgage rates and home prices.

“While demand for office furniture is expected to remain steady, we anticipate the overall furniture sector to face headwinds, with inflationary pressures continuing to weigh on discretionary consumer spending,” the house said. 

Public Investment Bank has maintained its “underperform” call on Poh Huat, along with its FY2025–FY2027 earnings forecasts. It kept its target price unchanged at RM1.16, based on eight times CY2025 forecast earnings per share (EPS).

On March 17, Poh Huat posted quarterly results that came in within expectations, meeting 22.3% of PublicInvest’s full-year forecast and 21.2% of consensus projections, despite its core net profit declining by 19.9% year-on-year to RM8.5 million.

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