PETALING JAYA: Power Root Bhd
is expected to post strong quarterly results ahead on higher export sales, improved operating efficiency and new product launches, according to CGS-CIMB Research.
The research house expected the group’s earnings to be driven by improved sales to Saudi Arabia starting from the second quarter of its financial year 2024 (2Q24).
The group targeted to have its product listings on Abbar Foods’ distribution channels by the end of June this year.
“The strong earnings will also be due to sustained demand momentum from its other segments on a pick-up in economic activities.
“In addition, we believe its margins could be enhanced by its efforts to improve operational efficiencies such as warehouse optimisation, sales automation, information technology platform rollout and the installation of new high-speed production lines, which could boost productivity,” added CGS-CIMB Research.
Power Root’s net profit was at RM15.29mil in 1Q24, down from RM15.26mil a year ago.
The group aims to launch a new premium tea brand in 3Q24 in Malaysia, further widening its product portfolio.
Domestically, the research house expected Power Root’s aggressive marketing campaign for its premium Frenche Roast product series in 2Q23 to help elevate its brand equity and boost domestic sales starting from 2Q24.
The group is engaged in the manufacturing and distribution of beverage products, which are fast-moving consumer goods.
In a post-results report, Kenanga Research said it anticipated weaker quarters ahead for the pre-mixed instant powder beverage company amid persistently high inflation and slow economic growth.
Helping to mitigate the downside, however, is the group’s product diversification and the expansion of its product lines.
Power Root announced its 1Q24 results last Monday, which showed a core net profit of RM15.3mil, below market expectations.
The results came in at 25% and 24% of Kenanga’s and consensus full-year estimates, respectively, setting Power Root up for a disappointing year, given the coming quarters are expected to yield weaker earnings.
