MORNING CALL:1/8/23

RHB Research believes DXN is in a strong position to deliver sustainable growth

Transcript

00:00 Health and wellness-oriented direct sales company DXN Holdings, which recently announced

00:06 its first half FY24 results, is our stock in focus today.

00:10 RHB Research keeping its buy rating on the stock with an unchanged target price of 93

00:16 cen, the counter closed yesterday at 74.5 cen.

00:20 In a note, RHB said DXN's first quarter core net profit of RM87 million accounted

00:26 for 26% of its full-year forecast, and looking ahead, it said DXN is in a strong position

00:32 to deliver sustainable growth, despite the global headwinds.

00:36 This will be underpinned by the growth in distributor member base as the group continues

00:40 to strengthen its presence in key existing markets and also make inroads into high-potential

00:45 new markets.

00:46 In addition, the completion of its latest phase of upstream expansion bodes well for

00:52 the group, enabling it to capture the ensuing rising demand and introduce more innovative

00:57 products to attract higher sales.

00:59 On top of that, RHB believes DXN is less affected by any hike in costs, thanks to its internal

01:05 integrated production facilities, which account for more than 90% of the group's revenue

01:10 and command a higher gross profit margin of more than 80%.

01:14 It said DXN's current valuation is attractive, plus the superior profit margins and ROE are

01:20 a strong testament to the group's entrenched fundamentals and well-crafted business model.

01:26 So what's the consensus?

01:27 According to Bloomberg data, there are three buy recommendations on the stock, with an

01:31 average target price of 90 cent.

01:34 DXN last traded at 74.5 cents, so that implies a potential downside of about 20 over percent.

01:40 [music]