KUALA LUMPUR (Oct 27): Maybank Investment Bank Bhd (Maybank IB) has maintained its “buy” rating on the health and direct selling company DXN Holdings Bhd at 67 sen, with an unchanged target price (TP) of 90 sen.

The TP is pegged at 11 times the price-to-earnings ratio for the calendar year of 2024 (CY2024E).  

In the note on Friday, the research house said it anticipates DXN Holdings to sustain its earnings growth momentum by 12% for the financial year 2024 (FY2024), and to continue driving-in sales from its expansion in the Latin American region, supported by its current increasing total active members. 

In addition, Maybank IB said the company’s plans to start new operations in new markets including Argentina which are set to commence in January 2024, and Brazil in March 2024, are on schedule. 

“We expect sequential earnings to improve on the back of planned price adjustments across its countries of operations and higher economies of scale from its newly commissioned facilities,” said Maybank IB.  

“DXN’s dividend policy revision to at least 50% detail project report (DPR) (from 30%-50% DPR) adds to its investor appeal,” it added. 

Earlier, DXN reported a robust group revenue growth of 16% year-on-year (y-o-y) in its second quarter of financial year 2024 (2QFY2024), indicating a strong sales performance in key markets. 

Subsequently, Maybank IB said the lower operating margin in the second quarter (2Q) was attributed to a faster pace of growth in fortified food and beverage (FFB), against its health and dietary supplements (HDS) and personal care (PCC) categories, with FFB accounting for 70% of total gross sales in 2Q, an increase of 4.2% y-o-y.  

At the time of writing on Friday, DXN shares were up one sen or 2.24% at 68 sen, valuing the company at RM3.39 billion.