Bullish outlook: DXN executive chairman Datuk Lim Siow Jin (right) and chief executive officer Teoh Hang Ching with some of the company’s products.
SEPANG: DXN Holdings Bhd
, a global health-oriented and wellness direct-selling company which will be listed on the Main Market today, aims to continue charting strong growth for its shareholders in the coming years.
Executive chairman Datuk Lim Siow Jin said the growth will continue to be driven by the purposeful expansion of its geographical market reach and the introduction of new products.
“I am optimistic about (achieving) this growth. Every month, we have about 200,000 new members, charting about 20% growth (in sales) every year. In every four years or so, this can double,” Lim said at a media briefing yesterday.
“In the year 2011 when we delisted, our sales were RM279mil. After 12 years, our sales are now at about RM1.6bil. This is more than a five-time increase and we expect similar growth in the next few years.
“This is because of the new markets that are expected to come in such as Brazil, North Africa and China,” he added.
Chief executive officer Teoh Hang Ching said while the group prioritises growth, it would also be paying out regular dividends to shareholders.
“For example, in the financial year 2022, we paid 50% (of net profits) in dividends. We will pay good dividends but we will still be able to maintain our growth to have enough to finance our capital expenditure (capex),” Teoh said.
“Moving forward, dividends will be about 30% to 50% of net profit every quarter. On growth, one can look at our previous 20-year performance and one would be able to predict what would happen in the future,” Lim said.
Lim said DXN had spent a considerable amount of money in the last few years to build factories worldwide.
“Some investors have highlighted that our capex has increased and this is to be expected. Also note that every year, our sales rose by about RM400mil.
“We cannot build the factory when the demand is present – you must have the factory first as it takes two to three years to build the facility.
“Even then, the capex does not affect our dividend – our cash in hand is still about RM457mil,” he added.
DXN has allocated RM120mil for its capex this year. “I think this is a reasonable figure, given our high sales,” Lim said.
Teoh said DXN adopted a cost-plus sales model where it sells to external distribution agencies – minus the marketing, operation and bonus costs that will be paid to its members who secured the sales.
“We let them (the distribution agencies) make these payments and for us, we have a profit over these,” Teoh said.
Meanwhile, Lim said raw material costs such as coffee beans represent a very small variable when viewed in the bigger picture.
“Coffee is a our major product, with about RM800mil in sales, and we have slowly shifted from being a health food company to a pure food company. Coffee beans are a commodity and the prices have been stable.
“As a multilevel marketing company, the main cost component is our operational costs.
“For example, to ask people to come to a hotel to have a meeting or gathering (to sell), which costs more than the raw materials. So, material costs are not that much,” Lim said.
DXN hopes its listing would help improve the group’s profiling and public relations, especially on the international market.
In making its comeback, the group’s listing will be the biggest on Bursa Malaysia this year.
“This listing is a very important move for us to provide assurance to stakeholders in terms of our business model as well as our financials,” Teoh said.
“When members join a multilevel marketing company, one thing that is always on their mind is how stable the company is, as there are many multilevel marketing companies that have collapsed.
“Once the companies are listed, members can see the financial results every quarter and they feel good about it,” Lim said.
Lim also believes that DXN’s investors would become its members.
“I think they seldom sell our shares as there is a kind of ownership and it let them follow our company closely. Members are our main supporters,” he said.
