Introduction

After close to 10 years of lacklustre performance, Koda is on the cusp of a multi-year growth trajectory mainly driven by the 3rd-generation of the Koh family who turned the company around by streamlining operations and divesting non-core assets.

At S$0.70, Koda is valued at S$57.6m. With a trailing P/E of 8x, I believe this company is undervalued given its robust balance sheet and clear growth catalysts.

The Business

Koda was founded in 1972 by Koh Teng Kwee and was listed in 2002. The group specializes in household furniture as an original equipment manufacturer (OEM) and original design manufacturer (ODM), exporting its products to more than 50 countries (including US, Europe, China, Japan) currently. It has factories in Malaysia and Vietnam.

In 2011, Koda launched its in-house retail furniture brand Commune as part of its diversification downstream. Commune commands higher profit margins compared to the manufacturing …