If you refer to my previous blog, I mentioned to you that I would like to invest into a low volatility and penny stock. And I will share with you after I bought it. Well, I managed to buy in the 1st stage on past Monday. Yes, it is HOMERIZ. You may know or hear about this counter before.
Homeritz Corp is an integrated designer, manufacturer and exporter of a complete range of upholstered home furniture, comprising leather and fabric-based sofas, dining chairs and bed frames. It was listed on KLSE 19th Feb last year. It is doing ODM and OEM activities, just like the recent debut red-chip stock Maxwell doing.
Competitive Edge
Unlike other local furniture players, Homeriz is a leading player with complete range of upholstery home furniture products. By looking at it's past year earning, apparently it has a better revenue and profit margin than others.
Over the past 5 years, Homeriz managed to diversify it's customers profile from 23 countries to more than 40 countries in the end of last year. Thus, the recent Europe market revenue shrinks shouldn't be a big issue for Homeriz with the clientele diversification strategy.
As for the management, it might be too early to tell they are capable or not. But by looking at their past year records, the husband and wife bosses are very keen to their business and they have an experience R&D team to keep the business running. The husband and wife bosses are currently holding 36% of the total shares.
Share Price Performance
Homeriz share price has been running on sideway steadily at 44 and 47 cents since last December, coming down from the peak of 62 cents. Apparently 44 cents are the lowest baseline of this counter so far. The counter is traded in very thin daily volume. Fund manager won't be interested in it anyway. Well, many people also said that furniture is a sunset industry and too high competition. I totally agreed with that.
Why Homeriz?
By viewing Homeriz from a different point of view, I look at it different and treat it as a gem. Fundamental wise it is great, with 110 millions revenue and 20 millions net profit, with the Return of Equity (RoE) of 43%. It's more or less the same result as last year, due to the decline of demand in Europe. But it will be gradually cover by the rising demands from other countries like USA.
With the buying price of 46 cents, it giving the dividend of 3 cents, equivalent to D/Y of 6.5% on last year. If the share price remains sideway or lower, it may provide higher D/Y for this year. The PER for Homeriz is stood at 4.6, where the industry PER is around 7.x and peer comparison is around 8-9. Homeriz also has the cash flow of 16 millions after deducting all borrowings.
Future Prospects
Furniture may not be a hot theme in stock market like oil and gas or property/construction. But I strong believe that there is always a demand on luxury furniture despite the high competition, with the booming of the luxury properties project around the world.
To obtain an outstanding revenue in coming years, I hope Homeriz can stand firmer in Asia market like China, Japan, Taiwan and Hong Kong while waiting for it's manufacturing plant in Vietnam to complete.
Furniture may not be a hot theme in stock market like oil and gas or property/construction. But I strong believe that there is always a demand on luxury furniture despite the high competition, with the booming of the luxury properties project around the world.
To obtain an outstanding revenue in coming years, I hope Homeriz can stand firmer in Asia market like China, Japan, Taiwan and Hong Kong while waiting for it's manufacturing plant in Vietnam to complete.
Have a nice weekend, folks.
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