Maybank IB in its report on the newly listed DXN offered a positive review on the company due to its strong global distribution footprint, having 79 sales branches and 12 external distribution agencies across 48 countries.
These strategically-situated branches and agencies support DXN’s 14.9m registered members and 3.6m active members in over 180 countries. It exerts full control from research to cultivation to manufacturing, which ensures that strict production quantity and quality standards are met. Its facilities are also strategically located to be close to key markets along with added local advantages relating to labour, land, and climate factors. Based on gross revenue contribution, c.90% of its direct-selling products sold are manufactured in-house historically. With this, supply constraints or production bottlenecks can also be quickly rectified.
The house estimates a 3-year (FY23-FY26E) core net profit CAGR of 12%, largely driven by a 3-year revenue CAGR of 16%, stable operating margins of 29% from FY24-FY26E, and an effective tax rate of 37% p.a. Topline growth will mainly be driven by higher active member growth and average revenue/active members in Latin American countries.
Mayank IB set a target price of MYR0.90 for the share price based on PER multiple of 10% premium to CY24E domestic peer average of 10x (market-weighted) given DXN’s steady 3-year forward net profit CAGR of 12% and superior ROAEs of 27%-31% p.a.
