Company Review: Koda

Koda is a leading ODM furniture exporter in South East Asia.  The company focuses on up market furniture and established customers over 50 countries.  The company is a micro-cap with only a market capitalization of just slightly over $100 mil. 

The company has posted 4 years of double digit growth in both revenue and profit.  CAGR net profit is 25% over the past 4 years.  With its production base shifted to Vietnam (lower cost), this growth is expected to continue for 2008. Net profit margin is approximately 10% with ROE of around 25%. The company has a net cash position with insiders holding approximately 68% of total shares.

I’ve purchased 12 lots at an average price of $0.751 (PE of 7.5 based on 2007 results).  Again, this is not such a cheap price considering the company has a small market capitalization.   However, I am intrigued by the company’s performance over the past few years and I like the way they report their results.  Company chairman has come forward to say that the company will not be affected by US sub-prime problem as company’s product is targeted at the higher end market.  With the volatility of market over the past few months, I have decided to pare down my holdings on Koda.  I will continue to hold the 5 lots of the company and wait for opportunity to purchase more if the price is right.