Koda - Rolling along the Fairway

Summary: We attended the annual International Furniture Fair Singapore 2008 at Expo this week, where international furniture wholesalers including Koda Ltd (Koda) showcased their products to global furniture buyers. Besides Singapore, Koda's road show extends to Malaysia, Vietnam and China. Management revealed that it received strong orders during the Furniture Fair this year, and in particular, its subsidiary Rossano saw a doubling of orders from last year. By pricing its products at a discount to Koda's, Rossano has been able to complement Koda's product range and has captured a new target market. Koda's key edge over its peers lies in the virtue of its low cost production base in Vietnam, where labour, rental and operating costs are cheaper than those in China. We are retaining our estimates for now, pending clarity on size of orders clinched from Koda's ongoing series of furniture fairs. Our rating remains a BUY, with a fair value estimate of S$1.01