The Daily Pulse of Bursa Malaysia

InNature should trend higher despite poor results

zaclim
Publish date: Thu, 30 May 2024, 08:49 AM
zaclim
0 111
Daily Pulse is a blog that provides daily stock updates and insights on the Bursa Malaysia.

Follow us in telegram for more daily discussion
https://t.me/xifuinvcommunity

InNature Bhd has not been doing well in terms of share price. The counter is down 46% in the past year to close at 28 sen on May 29. It hit a 52-week high of 60 sen last July but fell to a low of 28 sen recently.


However, it appears the selling is overdone. After overcoming a negative sloping trendline around mid-Apr this year, InNature looks to be extending its upward trajectory. The ongoing unwinding from the oversold territory and is expected to push the stock higher. Riding on the positive momentum, the stock could climb towards its resistance thresholds of 33 sen and 38 sen.


Fundamentally, InNature is not in a better position. It reported net earnings of RM10.5 million, down 51% YoY in FY Dec 2023. On a quarterly basis, its net profit declined 21% YoY to RM2.4 million in 1QFY24.


Going forward, the group is forecasted to post stronger net earnings of RM12 million in FY24 and RM13.8 million in FY25 according to consensus estimates. This implies prospective price earnings ratio (PER) valuations of 16.8x this year and 14.6x next year.


InNature, which operates The Body Shop franchise, is a leading regional retailer of cosmetics and personal care products. It is serving customers across Malaysia, Vietnam and Cambodia through stores, e-commerce and other remote channels.


Investors are probably disappointed with its share price performance, which has lost more than half its value from its initial public offering price of 64 sen in February 2020. The Body Shop franchisee has been suffering from shrinking margins and sales. Investors were spooked by the news of The Body Shop’s owner — The Body Shop UK — being put under administration by German private equity firm Aurelius to facilitate a restructuring of the business. To allay investors’ concern, InNature has assured that there will be sufficient product supply until past 2025.


Recognizing its bleak future, the company has little choice but to look for alternative source of income. The group announced a food & beverage (F&B) venture — a takeover of Blu Restaurant Sdn Bhd for RM21.25 million cash in a related-party deal. Blu Restaurant, which is controlled by InNature’s husband and wife team. Datuk Simon Foong is the chairman and his wife is managing director Datin Mina Cheah-Foong. The duo has the exclusive rights to open and operate restaurants under the Burger & Lobster brand in Malaysia (excluding the outlet in Genting Highlands), Indonesia and Vietnam. Currently, Blu Restaurant operates a Burger & Lobster outlet in Suria KLCC mall.


Honker, Cheah-Foong is confident that The Body Shop (TBS) brand will persevere despite the restructuring of the business as TBS’ business in Malaysia is not affected. InNature is the franchisee of the business in Malaysia, Vietnam and Cambodia. In most Asian markets, including Malaysia and the Middle East, the business is run by franchisees. InNature gets its products from Aurelius-owned The Body Shop International Ltd.


In Malaysia, the group now has 76 stores, compared with 89 in 2019, and in Vietnam, 36, compared with 34 in 2019. In Cambodia, it has increased to three from just one. Despite the poor results, the stock should continue its upward trajectory. Analysts are expecting positive earnings growth prospects for the group and should see more upside in terms of share price.

More articles on The Daily Pulse of Bursa Malaysia
Censof hits 30-month high on heightened investors’ interest. Can it sustain?

Created by zaclim | Jun 13, 2024

Censof Holdings Bhd is on a good run, gaining close to 20% in just over two days. Has investors missed the boat or can they still make some trading profits from this counter?

Edelteq offers interesting upside to investors

Created by zaclim | Jun 12, 2024

Edelteq Holdings Bhd has seen a surge in its share price to reach a 10-month high recently. Can the upswing continue

Pantech to see continued upward momentum despite poorer results

Created by zaclim | Jun 11, 2024

Pantech has made good ground in terms of share price, rising close to 50% in the past year. While it posted disappointing results recently, it will likely ride on the expected elevated crude oil price

Evergreen poised to turn the corner, boosted by pick up in demand from the US and EU

Created by zaclim | Jun 10, 2024

Evergreen Fibreboard Bhd has shown signs of a bullish momentum and could see it move closer to its year high of 38 sen. Question is when it can move beyond that level.

Inta Bina rallies to record high share price. Can it go further?

Created by zaclim | Jun 10, 2024

Inta Bina has seen surge in share price recently after bagging RM112 million job. The size of the job may not be so huge but collectively with 5 new jobs this year alone, the future looks promising

Is Datasonic ready to propel higher?

Created by zaclim | Jun 10, 2024

Datasonic Group Bhd touched a new 3-year high on June 7. Indications are that the counter is likely to continue to surge upwards given its improving financials. Time to get your hands in this counter?

ITMAX saw new highs but signs point to more bullish movements

Created by zaclim | Jun 06, 2024

ITMAX System Bhd shareholders gota treat after the counter touched its new high of RM2.47. Is it still time to enter?

Prostasco on the rise with better prospects

Created by zaclim | Jun 04, 2024

Protasco Bhd has appreciated more than 50% in over a year despite its loss making position. Hopes are high that it will continue to be profitable after returning to the black in FY23.

Press Metal saw heightened buying interest after posting good FY24 results

Created by zaclim | Jun 04, 2024

Press Metal Aluminium Holdings Bhd is back on investor’s radar, hitting a high of RM6.50 recently.

Tek Seng on higher ground, growth in sight

Created by zaclim | May 31, 2024

Tek Seng Holdings Bhd has been gaining traction although it has not moved much in the past year. What is driving the positive momentum?

Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment