HTL Int’l

HTL Int’l: CIMB cuts target price to $0.73 from $1.10, based on 6X FY11 P/E vs 8X previously, to reflect FX risks given sofa maker's exposure to EUR. Also lowers FY10-11 earnings estimates by 7%-19% to assume lower sales in Europe, higher production costs. Notes HTL derives more than 65% of sales from Europe, but exposure to EUR lower at about 20%-25% as most European customers billed in USD.


But CIMB keeps Outperform call, as HTL is better positioned this year to face challenging market conditions having strengthened its presence in major markets during the recent tough times. Also likes HTL’s inventory management capability.