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DKSH Malaysia got a one time boost with its 2019 acquisitions
2019 was a crucial year for the Group. It acquired Auric Pacific that had a strong presence in the food service channel. It also covered chilled and frozen products in both food service and grocery channels.
The acquisition boosted DKSH revenue growth. Furthermore, returns that were declining for some time seemed to reach the bottom in 2019 and began to improve. But these improvements seem to be tapering off suggesting that the 2019 acquistion was a one-time boost.
The positive sign is that there is more than 30% margin of safety at the current market price. These suggest that if you are going to invest in DKSH, it should view it as a cigar-butt investment rather than investing in a compounder. https://www.i4value.asia/2024/09/is-dksh-investment-opportunity.html#more
We believe that the introduction of EPF Account 3 will help to boost consumer consumption which will likely offset the impact from higher cost of living. This should augur well for DKSH, given its diverse portfolio of premium and affordable options. Therefore, we think that should there be down-trading among consumers, DKSH would still be able to mitigate the negative impact. All told, we expect DKSH to post a net profit growth of 10.6% YoY.