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Natuzzi SpA Message Board

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  • watchthedownside watchthedownside Sep 11, 2009 12:46 PM Flag

    What goes up for no reason...

    Great comments from all

    One issue that has brought up and that is an interesting one is the issue of secular decline in the U.S. furniture business. Clearly the decline is cost-based as opposed to demand-based as is similar in the newspaper business (unless people plan on sitting on cardboard in the future). I believe that the best comparison is the electronic contract manufacturing business (ie. Celestica, Flextronics). Everyone thought the sector was dead because Foxconn had cheap Chinese labor and outbid on all contracts. Over time the industry moved production to cheaper locations and now will be on par with Foxconn in terms of bidding on new demand. A very similar situation appears to be brewing in the furniture business in the developed world. Chinese cost advantages will be narrowing at the same time new furniture plants in cheaper locations will be running at capacity (2011/12 timeframe??)

    In any event I loaded up on select furniture companies around less than 1x my estimates for normalized e.p.s. CRC and NTZ remain the two best bargains in the sector imho, at around 1.8x and 2.5x my normalized e.p.s. estimates respectively.

    Would be interested in others' thoughts.

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NTZ
1.70+0.02(+1.19%)Mar 3 4:03 PMEST

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