Homeritz to benefit from strong US dollar, rate cut

PETALING JAYA: Furniture manufacturer Homeritz Corp Bhd is well-positioned to benefit from the recent strong US dollar, while further US interest rate cuts could boost housing and furniture demand going forward, says Hong Leong Investment Bank Research (HLIB Research).

“We think Homeritz stands to benefit from the current strong US dollar against the ringgit since about 90% of its revenue is denominated in US dollars. In addition, further US interest rate cuts could boost housing and furniture demand as the market is expecting another reduction of 25 basis points.

“However, these positives may be partially offset by the upcoming hike in the local minimum wage from RM1,500 to RM1,700 effective February this year,” it said.

Homeritz is an integrated designer, manufacturer, and exporter of a complete range of upholstered home furniture.

On the estimated RM3mil loss due to a recent fire that occurred at a premises belonging to EISB, a wholly owned subsidiary of Homeritz, the research house said that although the balance-sheet impact was relatively minor, the incident may temporarily affect production capacity.

The research house added that, for now, the company’s management remained relatively tight-lipped about the impact of the fire on its profit and loss.

HLIB Research said it is maintaining its “hold” call on the company with a target price of RM0.62 pegged to an unchanged eight times 2025 price-earnings ratio, in, line with its five-year mean of eight times.

“In our view, any downside risk to share price should be supported by the group’s healthy balance sheet with net cash of RM193.4mil,” it added.

Homeritz posted core profit after tax and minority interests of RM11.5m for the first quarter its financial year 2025. The research house said the results were within both its and consensus estimates.