KUALA LUMPUR: Public Investment Bank (PublicInvest) remains cautiously observant of Homeritz Corp Bhd's short-term direction, citing the prevailing high interest rates amid ongoing inflationary pressures. 

However, the investment bank holds a positive outlook regarding the company's ongoing developments, notably its proactive engagement in furniture exhibitions to expand its customer base. 

"These efforts are expected to continue bolstering the group's performance moving forward, the investment bank said in a note.

PublicInvest said the company's concerted efforts to optimise cost structures through the expansion of its supplier network should help to cushion input cost pressures, further bolstering its competitive positioning.

Homeritz's second quarter 2024 (2QFY24) headline net profit rose by 65.9 per cent year-on-year (YoY) to RM9.2 million, primarily attributed to higher sales volume across all regions. 

After adjusting for non-core items, the company's core net profit came in at RM7.9 million (49.2 per cent YoY). 

PublicInvest said the results were above both the company's and consensus estimates at 63 per cent and 59 per cent respectively.   

"The discrepancy in our forecast was due to the higher-than-expected sales volume, primarily driven by the acquisition of new clientele from the company's proactive engagement in furniture exhibitions in Germany, Vietnam, and Guangzhou. 

"We gather that sales from the US market are picking up, but the orders remain relatively small. All told, we revise up our earnings forecasts by an average of 16 per cent for FY24F–26F to factor in higher sales volume with the acquisition of new customers," it said.

PublicInvest reiterates its neutral call on Homeritz, with a higher target price of 58 sen based on a nine-times PE multiple.