Spring Art rides on higher demand for its furniture products

Spring Art Holdings Bhd may not be seen as a ‘sexy’ counter but it could see a rebound in its share price.

The counter is likely to spring higher after recovering from a low of 20 sen on Apr 19 to close at 21.5 sen on Apr 26.

Its resistance levels are set at 25.5 sen and 30 sen.

It has performed well over the past year, rising 37.5%.

It managed to touch a year high of 27 sen on Apr 8 versus a low of 14 sen a year ago.

More excitingly, Spring Art, manufactures office and household furniture, is a proxy to the rising furniture demand from Middle East and Asia Pacific.

It managed to return to the black with a net profit of RM2.7 million in 4QFY23 from net loss of RM301,000 a year ago, lifting its FY23’s bottomline to RM5.5 million (up 153% YoY).

This was on the back of higher revenue of RM20.1 million versus RM11.7 million.

The company also benefitted from the strengthening of the US dollar against the ringgit.

Its revenue is denominated in the US dollar, Singapore dollar and ringgit as its furniture products are mainly exported.

Its export markets include UAE, India, Japan Bahrain, Canada, Saudi Arabia and Singapore.

Based on its book value per share of 21 sen as of end-Dec 2023, the stock is trading at

a price / book value multiple of 1x.

Spring Art manufactures ready-to-assemble furniture products, where it undertakes the design and development and manufacturing.

It also markets and sells office furniture, bedroom furniture, living room furniture as well as other types of furniture.

The company can expect better prospects once its Factory C is completed in the second quarter of the year.

With more production capacity, it can work on improving its products to better meet its customers' needs.

The company previously mentioned that Factory C’s capacity is meant to facilitate its plan to increase its presence in North America and European markets.

Investors should be relieved that the company has turned positive in terms of its 4Q results and should be able to maintain its momentum.