I still remember the days where they are a few companies in the business of Home Furnishing, such as Nobel Design, HTL International & Koda. However, Nobel Design and HTL have been privatised.
Koda caught my eyes as it is debt free and trading at below 10x PE ratio.
So i decided to investigate further if Koda can by a multibagger.
Koda caught my eyes as it is debt free and trading at below 10x PE ratio.
So i decided to investigate further if Koda can by a multibagger.
Recent Developments:
In 2011, Koda introduced a new furniture brand called Commune. The brand is managed by third-generation members of the Koh family, which owns Koda.
The Commune has better margins than Koda’s original design manufacturer business, which makes furniture for other companies. Its contemporary design aesthetic has been popular among furniture buyers in China, where Commune is growing fastest.
Currently, Commune has 43 stores in China. Koda will continue to put a strong focus on expansion in China, aiming to increase its Commune stores in China to 100 by FY2020.
The HYPE
"An Original Design Manufacturer (ODM) and major exporter of furniture in Southeast Asia, Koda started out locally in 1972 in the woodcraft business producing speaker boxes, television cabinets and jewellery boxes. It then converted to furniture making in 1980, which proved to be a more lucrative business. Today, 60% of their products are dining room furniture.
The company has created a niche market for itself internationally by customising to its customers’ requirements. Koda has won many repeat customers by merit of its stylish designs and precise workmanship. Its innovative products are exported to more than 200 upmarket and established customers located in over 50 countries."
Souce: http://www.sesami.net/Industry_feature6.aspx
With the reputation it has built up over the decades, Koda now has its own brand, "Commune". It will have another revenue stream that will fetch higher margins.
There is an aggressive plan by Koda to grow the distribution and retail arm in China.
Koda explained that they have in the last few years, streamline their business and remove the unprofitable aspect of it.
The Updates:
“We want to offer a seamless shopping experience. We intend to make use of a variety of
digital channels while leveraging our physical stores to differentiate Commune from the
competition and to gain a competitive edge over online-only retailers. We will share more
details about this strategy in the coming months,” said Mr Joshua Koh, as announced in the 1HYFY2018.
Financials:
Net profit for 6 months FY2018 is US$2.4 million, a 26% increase over the same period in FY2017.
Cash flow has been positive, ending the Half Year with US$8 million in hand, up from US$6.1 million during the same period last year.
Cash flow has been positive, ending the Half Year with US$8 million in hand, up from US$6.1 million during the same period last year.
There is minimum debt which is commendable. Despite the aggressive expansion plan into the retail business in China, Koda did not leverage on debt.
My Take:
Koda sounds reasonable at this price, of S$0.625, after hitting a high of $1.095 on 31st Oct 2017.
EPS stands at Singapore 3.8cts.
EPS stands at Singapore 3.8cts.
Forwarded PE will be 8.12x.
If James Koh were to announce a positive plan for Koda to embark on, i believe, in the coming months, Koda will trade at higher valuation .
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