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| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.51 (-20.3%) |
| Last Traded | RM0.64 |
| Recommendation | SELL |
Beshom Holdings Bhd (Beshom) reported second-quarter FY26 results that fell short of market expectations, primarily due to a significant downturn in sales. The group’s first-half FY26 core earnings stood at RM3.7 million, representing only 42% of both TA Securities’ and consensus full-year earnings projections.
Performance Review
For the quarter ended, 2QFY26 revenue saw a 6.7% year-on-year decline to RM38.5 million. This drop was largely attributed to more cautious spending among its Multi-Level Marketing (MLM) members. Concurrently, quarterly core net profit decreased by 20.0% year-on-year to RM2.1 million. The profit contraction was mainly driven by reduced sales of higher-margin PB Thera series products within the MLM division and an unfavourable sales mix in the wholesale division. In contrast, the retail division showed a slight improvement, with losses narrowing to RM0.1 million from RM0.3 million, supported by a half-yearly sales campaign and aggressive promotions for new traditional Chinese medicinal products.
Cumulatively, IHFY26 core earnings declined by 29.6% year-on-year, primarily due to weaker performance across the MLM and retail divisions. Furthermore, softer 2Q results from the wholesale division added pressure to the group’s first-half profitability. The company declared a single-tier interim dividend of 1.0 sen per share for the quarter, a decrease from the 1.5 sen per share declared in 2QFY25.
Future Outlook and Strategic Initiatives
Looking ahead, Beshom indicated it would proactively manage operating costs and enhance sales strategies to sustain profitability. Key initiatives include expanding distribution channels and FMCG product offerings to broaden market reach. The group also plans to optimize its physical footprint by closing underperforming stores or relocating outlets to more strategic locations, alongside launching incentive travel campaigns to motivate its members and distributors.
Analyst Commentary and Valuation
Following the disappointing results, TA Securities revised downward its sales assumptions by 11.4%-11.9% for FY26-28. Consequently, the investment bank’s core earnings forecasts for FY26, FY27, and FY28 have been reduced to RM7.9 million, RM11.4 million, and RM11.7 million, respectively, from previous estimates of RM8.9 million, RM12.9 million, and RM13.4 million.
Reflecting these revisions, TA Securities adjusted its target price for Beshom to RM0.51 per share, down from the previous RM0.58 per share. This new target price is based on 15x CY26 EPS. The firm maintained its “Sell” recommendation on the stock.
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