• One of the leading regional retailers of cosmetics and personal care ("CPC") products, under the brand - The Body Shop and Natura.

• Operates a total of 121 retail stores across West Malaysia, Sabah, Labuan, Vietnam and Cambodia with products also sold via selected third-party online stores such as Hermo, Tiki, Lazada and Shopee.

• Surge in e-commerce channel will continue to cushion the weakness from the retail stores channel over the foreseeable future. Technically, a flag-formation breakout above RM0.44 suggests for further upside that may drive share price towards the next resistances at RM0.475-0.495 with long term target at RM0.505.FY20* based on trailing-12-months data

Trading Catalyst

• InNature Bhd (InNature) started off via the establishment of first retail store at Plaza Yow Chuan, Kuala Lumpur, Malaysia in 1984. As of 30th June 2020, InNature carries the brand known as The Body Shop and Natura under a total of 121 retail stores across West Malaysia, Sabah, Labuan, Vietnam and Cambodia. Besides, the group’s products are sold via selected third-party online stores such as Hermo, Tiki, Lazada and Shopee.

• We like InNature for their position as one of the leading regional retailer of cosmetics and personal care ("CPC") products. We reckon that the geographical diversification over the years bodes well with InNature venturing into the Vietnam market back in 2009 in view of the growth of middle-income class that see improved spending power and expects to replicate the success after penetrating into Cambodia in 2019.

• Moving forward, InNature targets to open five new openings (four in Vietnam, one in Cambodia) for The Body Shop operations 2H2020. We think that the surge in e commerce channel will continue to cushion the weakness from the retail stores channel over the foreseeable future. At the same time, InNature adopts a minimum 30% dividend pay-out policy from its net profit.

Technical Outlook

• Technically, share price is on the uptrend formation as price formed a higher high and higher low formation over the past couple of months. Following the recent retracement, price has formed a hammer candle, suggesting for a potential recovery. A flag-formation above RM0.44 may suggest for further upside towards the next resistances at RM0.475-0.495 with long term target at RM0.525. Support is pegged at RM0.425 and cut loss is located at RM0.42.

Source: Mplus Research - 12 Oct 2020