OCBC IR analyst Lee Wen Ching enjoying Man Wah's leather massage chair during a visit to the company's showroom. Photo by Sim Kih
OCBC INVESTMENT Research today (Jul 17) highlighted two furniture stocks trading at just over 3X current-year PE despite buoyant business.
OCBC analyst Lee Wen Ching noted in a report today that “despite possessing strong investment merits, there are stock that have been indiscriminately battered down. The furniture sector is a case in point.”
Despite their proven track records, shares of Man Wah Holdings and Cacola Furniture Int’l have been watered down to just over 3x current year PER.
”We are of the view that MWH and Cacola offer the most compelling growth opportunities as they have both recently expanded their production capacities to meet excess orders, enabling themto ride on China’s housing boom.”
OIR is projecting double-digit earnings growth in the range of 22% to 32% for MWH and Cacola for the current financial year.
At current levels, they are trading at just 3.7x and 3.2x current year PER, respectively, making them attractive investments with undemanding valuations, coupled with sound growth prospects, according to the report.
”We reiterate Cacola [BUY, S$0.75 fair value] and MWH [BUY, S$0.51 fair value] asour top stock picks within the furniture sector.”
Recent story: MAN WAH: Analysts say 'buy' after sterling FY08 results
Cacola enjoyed 67% jump in net earnings last year.
Man Wah had a 107% surge in net profit for the year ended Mar 08.
