Maybank IB Research believes DXN’s growth prospects lie in its continued geographic expansion into Brazil and Argentina.

PETALING JAYA: Analysts are upbeat about DXN Holdings Bhd’s growth prospects despite its first-quarter earnings coming in below expectations.

According to RHB Research, the company is attractive in terms of valuations, given that its business will be driven by its expansion plans and healthy cash flow generation.

“DXN’s earnings growth will be supported by the relentless growth momentum in major markets. The core strategies to recruit new members and enhance the members’ productivity will continue to revolve around member engagements, complemented by quality new product launches,” it explained.

The research house added that the recent capacity expansion could help the company to capture the rising demand and roll out new product categories to broaden the addressable markets.

“The consequent efficiency gain together with annual price adjustments will sustain the high gross profit margin of 80%, notwithstanding the rising input and overhead costs,” it said.

The research house expected a significant earnings contribution from its venture into Brazil in the next three to four years, leveraging on DXN’s existing network in the Latin American region.

It maintained a “buy” call on the stock but with a lower target price of 80 sen (from 88 sen), signifying a 58% upside and 7% financial year 2026 yield.

RHB Research said the valuation was below the consumer sector average to take into account the highly regulated direct selling industry DXN is in.

The research house pointed out that DXN’s results for the first quarter of FY26 (1Q26) missed forecasts due to unfavourable foreign exchange (forex) movements and ongoing currency crisis in Bolivia, which is a key market.

It said DXN’s net profit of RM74mil, down 14% year-on-year (y-o-y), met only 19% of the research house’s and consensus forecasts, mainly due to the unfavourable forex, prompting it to cut FY26 to FY28 earnings by 9%, 6% and 5%, respectively.

Maybank Investment Bank Research has kept its “buy” call and target price of 72 sen as well as its FY26 to FY28 earnings estimates unchanged, pending DXN’s 1Q26 results briefing.

It said DXN’s 1Q26 results came in below expectations mainly due to lower-than-expected sales on unfavourable forex movements against the ringgit.

Similarly, Maybank Investment Bank Research has kept its “buy” call and target price of 72 sen as well as its FY26–FY28 earnings estimates unchanged, pending DXN’s 1QFY26 results briefing.

It said DXN’s 1QFY26 results came in below expectations mainly due to lower-than-expected sales on unfavourable forex movements against the ringgit.

“We caution that the persistent strength in the ringgit may continue to suppress the group’s overall sales growth potential.

“Pressure on DXN’s overall sales may persist if the ringgit continues to strengthen against the currencies of its core markets (like Latin America), given that its sales in Malaysia is estimated to account for 10% of total group sales, with the remainder in foreign currency,” Maybank IB Research said.

Nevertheless, the research house believes DXN’s growth prospects lie with its continued geographic expansion into Brazil and Argentina, which it hopes to replicate the successes it achieved in Peru and Bolivia.