PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 22 Oct 2020, 9:57 AM


DKSH Holdings (M) Berhad- Anticipating Stronger 2H

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DKSH Holdings (M) Berhad (DKSH) reported a 2QFY20 net profit of RM7.8m, down by 32.7% YoY, mainly dragged by the closure of Famous Amos stores during the Movement Control Order (MCO) and the Logistics segment. 1HFY20 results were below our and consensus expectations, accounting for 39% and 34% of our full-year forecast respectively. We keep our earnings forecasts unchanged as we are expecting a stronger 2H as the reopening of businesses should narrow down losses for the Others segment. Therefore, we reiterate our Trading Buy call on DKSH with an unchanged TP of RM3.80 based on FY21F pegged to 11x PER.

  • 2QFY20 revenue fell by 7.9% YoY to RM1.45bn as both Logistics and Others segment recorded lower turnover. Marketing and Distribution segment revenue grew marginally by 1.3% YoY as the group managed to secure new clients as well as the growth from existing clients. Logistics segment saw its revenue declining by 16.9% YoY despite maintaining its operations due to a reduction in customer operations and consumer demand during the MCO period. For the Others segment, revenue dropped by 63.4% YoY due to the closure of Famous Amos stores amid MCO period.
  • 2QFY20 operating profit lower by 20.7% YoY to RM22m. Marketing and Distribution segment grew by 31.3% YoY, as the group no longer incurs consulting cost given the completion of its growth and efficiency improvement project. On the other hand, both Logistics and Others segment posted weaker operating results due to the imposition of MCO.
  • Anticipating stronger 2H. The reopening of businesses should augur well for DKSH as it will likely pare down losses for the Others segment. In addition, we are also expecting consumer spending to recover gradually before reverting back to normalcy in 4QFY20 on the back of higher consumption ahead of festive seasons. Moving forward, as the group continues to reap the benefits from its growth and efficiency improvement project, we believe that it should lead to an uptick in DKSH’s operating margins

Source: PublicInvest Research - 27 Aug 2020

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