The positive sentiment was due to the health supplement manufacturer’s encouraging performance in its first quarter ended May 31, 2023 (Q1 FY2023), said the research house.
Other factors include the group’s promising growth potential, successful entry into new markets, and resilience against rising operational costs, said RHB Investment.
In a note today, the research house said DXN’s stellar profit margins and return on equity are evident pertaining to its entrenched fundamentals and well-crafted business model.
“DXN’s current valuation is attractive, considering its solid growth prospects underpinned by new market expansion and insulation from the rising costs,” noted analyst Soong Wei Siang.
For its first quarter, the group’s net profit edged up marginally by 0.6% to RM77.6 million in Q1 FY2023 from RM77.17 million in the corresponding quarter last year.
Meanwhile, the group has declared a dividend of 0.80 sen per share.
Steadfast amid headwinds
In spite of slowing global economic growth and elevated inflation, RHB Investment sees DXN in an advantageous position to deliver sustainable growth.
“This will be underpinned by the growth in distributor member base as the group continues to strengthen its presence in key existing markets and at the same time makes inroads into high potential new markets,” said Soong.
“In addition, the completion of the latest phase of upstream expansion bodes well for the group to capture the ensuing rising demand and introduce more innovative products to attract higher sales,” he added.
“On top of that, we also see DXN to be 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 gross profit margin of greater than 80%,” he further added.
DXN returned to Bursa Malaysia on May 19, 2023 after a 12-year hiatus.
It was previously listed in 2003 but was delisted in 2011 following a takeover and privatisation by its founder Lim Siow Jin, who is currently its executive chairman.
As at 12.08pm, DXN’s share price rose 2 sen or 2.68% to 76 sen, giving the group a market capitalisation of RM3.79 billion.