PETALING JAYA: DXN Holdings Bhd
is perceived to be in a robust position to achieve growth, primarily due to its expansion plans.
RHB Research said, notwithstanding the challenges posed by a slowing global economy and heightened inflationary pressures, DXN is in a strong position to deliver sustainable growth.
“This will be underpinned by the growth in its distributor member base as the group continues to strengthen its presence in key existing markets, and at the same time, make inroads into high potential new markets,” the brokerage noted in a report.
Additionally, it believes that DXN’s completion of the latest phase of upstream expansion bodes well for the group, as it enables it to meet the growing market demand and introduce more innovative products, ultimately leading to higher sales and business growth.
Similarly, Maybank Investment Bank (IB) Research believes that DXN is poised for a stable outlook in the future.
The research firm anticipates that the company’s Latin America sales will continue to play a vital role in driving its topline growth as DXN’s presence expands further in the region.
Moreover, both the research houses expect DXN’s internal costs to be stable, on the back of the group’s vertically integrated operational efficiencies.
“On top of that, we also see DXN less affected by any hike in costs, thanks to its internal integrated production facilities which account for more than 90% of the group’s revenue and command a higher gross profit margin of over 80%,” RHB Research explained.
Likewise, Maybank IB Research said, “Group margins are also expected to remain consistent due to its value chain efficiencies.”
For the first quarter ended May 31, 2023, DXN recorded a net profit of RM77.6mil, resulting in an earnings per share of 1.6 sen, on par with the net profit of RM77.17mil registered in the same quarter in 2022.
The result is in line with the expectations of both research houses, constituting 26% of their full-year earnings estimates
Maybank IB Research, which made no changes to its earnings forecasts, expects DXN to post a 12% growth to its financial year 2024 earnings.
This is premised on growing active members in all its top 10 markets, including Peru, Bolivia, India and Mexico, along with a gradual growth in revenue per active member. It maintained a “buy” call on the stock, with an unchanged target price (TP) of 90 sen per share.
RHB Research reiterated a “buy” call on the health-oriented and wellness consumer products firm with a TP of 93 sen apiece.
