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Monday, February 25, 2008

Several factors make Furniweb attractive

PETALING JAYA: Furniture-webbing manufacturer Furniweb Industrial Products Bhd is deemed attractive due to its leading position in the industry, the steady demand for its products, low gearing, stable margins and the proposed listing of its subsidiary in Vietnam.

Research house M&A Securities Sdn Bhd, in a recent report, said the impending listing of Furniweb Manufacturing (Vietnam) Co Ltd on the Ho Chi Minh City Securities Trading Centre would give the group direct access to the Vietnamese capital market to tap funds to grow and enhance its business.

Furniweb has a wide product range, including covered yarn, industrial webbing and seatbelt webbing. Its products are available in more than 40 countries.

The second board-listed company currently operates from four factories in Selangor and another four in Vietnam.

According to M&A Securities, Furniweb commands 20% to 25% share of the global market. It is the largest covered elastic yarn producer in the country.

The research outfit believes that continued investment in research and development would help Furniweb capture new markets in Malaysia and globally.

Its earnings growth has been consistent at 10% a year for the past three financial years, thanks to rising global demand from the furniture, apparel and motor vehicle sectors.

Moving forward, the company's strong distribution channel, which includes Europe, China and the United States, should help the company penetrate new markets, M&A Securities said.

The research house is forecasting Furniweb's sales to reach RM105mil in the financial year ending Dec 31.

On Friday, it reported sales of RM93.9mil for FY07. Net profit for the period stood at RM8.7mil or 9.60 sen per share against RM7.8mil or 8.72 sen per share the previous year.

Investment risks associated with the company include a lack of long-term contracts with its customers which are made up of end-users, agents, distributors and suppliers, as well as low barrier to entry into the industry.

By The Star (by Yvonne Tan)

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