RHB
30 July 2025
DXN Holdings (DXN MK): Growth Masked By Unfavourable FX; Still BUY
Consumer Cyclical | Consumer Products
Target Price (Return): MYR0.80 (+58%)
Price (Market Cap): MYR0.51 (USD593m)
ESG score: 2.9 (out of 4)
Avg Daily Turnover (MYR/USD): 1.13m/0.26m
Analyst
Soong Wei Siang
+603 2302 8130
soong.wei.siang@rhbgroup.com
- Maintain BUY, with new MYR0.80 TP from MYR0.88, 58% upside and c.7% FY26F (Feb) yield. DXN Holdings’ 1QFY26 results missed forecasts due to unfavourable FX movements and ongoing currency crisis in Bolivia, a key market. Still, we continue to like the group for its attractive valuation considering the effective business model to penetrate new markets and foster sustainable growth, Brazil expansion as a medium-term growth driver, and healthy cash flow generation to facilitate a generous dividend payout.
- 1QFY25 results were below expectations. Net profit of MYR74m (-14% YoY) met only 19% of our and consensus forecasts mainly due to the unfavourable FX. Post results, we cut FY26F-28F earnings by 9%, 6%, and 5%. Correspondingly, our DCF-derived TP drops to MYR0.80 (inclusive of a 2% ESG discount), which implies 11x FY26F P/E. The valuation is below the consumer sector average to take into account the highly regulated direct selling industry DXN is in.
- Results review. YoY, the flattish 1QFY26 revenue growth (+1%) was due to unfavourable FX translation effects as a result of a stronger MYR and sharp depreciation of practical Boliviano in the midst of the country’s currency crisis. The like-for-like sales growth in constant currencies would have been >20%, driven by robust growth in key markets. Meanwhile, the group incurred FX losses of MYR9.6m and consequently 1QFY26 net profit dipped 14% YoY to MYR74m. QoQ, 1QFY26 sales grew 4% to MYR479m, driven by stronger sales performance in Latin America but profitability was negatively impacted by the abovementioned FX losses. That led to a 13% QoQ decline in net profit. First DPS of 0.9 sen was declared (1QFY25: 0.9sen), representing a 60% payout ratio.
- Outlook. 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. Meanwhile, the recent capacity expansion should help to capture the rising demand and roll out new product categories to broaden the addressable markets. In addition, the consequent efficiency gain together with annual price adjustments will sustain the high GPM of c.80%, notwithstanding the rising input and overhead costs. On top of that, we look forward to the result of the entry to Brazil, leveraging on DXN’s established existing network in the Latin American region. We expect significant earnings contribution from this venture in the next three to four years.
- Risks to our recommendation include major delays in expansion plans and unfavourable regulatory changes.
Share Performance (%)
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | (2.0) | 1.0 | 0.0 | (2.9) | (21.1) |
| Relative | 5.2 | 1.3 | (0.5) | (1.0) | (14.9) |
| 52-wk Price low/high (MYR) | 0.46 – 0.66 | ||||
Forecasts and Valuation
| Feb-24 | Feb-25 | Feb-26F | Feb-27F | Feb-28F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 1,803 | 1,908 | 2,161 | 2,428 | 2,676 |
| Recurring net profit (MYRm) | 321 | 329 | 362 | 451 | 505 |
| Recurring net profit growth (%) | 6.5 | 2.4 | 10.0 | 24.5 | 12.1 |
| Recurring P/E (x) | 7.84 | 7.65 | 6.95 | 5.59 | 4.98 |
| P/B (x) | 2.0 | 2.0 | 1.7 | 1.5 | 1.3 |
| P/CF (x) | 6.97 | 5.66 | 6.90 | 4.72 | 4.18 |
| Dividend Yield (%) | 7.1 | 7.3 | 7.2 | 9.0 | 10.0 |
| EV/EBITDA (x) | 4.98 | 4.56 | 4.25 | 3.40 | 2.99 |
| Return on average equity (%) | 27.8 | 25.8 | 26.6 | 28.8 | 28.0 |
| Net debt to equity (%) | net cash | net cash | net cash | net cash | net cash |
Overall ESG Score: 2.9 (out of 4)
E Score: 3.0 (GOOD)
S Score: 2.7 (GOOD)
G Score: 3.0 (GOOD)
Please refer to the ESG analysis on the next page
Emissions And ESG
Trend analysis: No like-for-like comparison available
| Emissions (tCO2e) | Feb-23 | Feb-24 | Feb-25 | Feb-26 |
|---|---|---|---|---|
| Scope 1 | 2,755 | 2,908 | na | na |
| Scope 2 | na | 8,881 | na | na |
| Scope 3 | na | 6,731 | na | na |
| Total emissions | 2,755 | 18,520 | na | na |
Latest ESG-Related Developments
Started tracking carbon emissions more thoroughly in FY24.
Integrate ESG practices into its product manufacturing and distribution processes by implementing a comprehensive quality control process at every production stage.
DXN made various sponsorships and donations amounted to >RM5m as part of its efforts to contribute to the betterment of society.
ESG Unbundled
Overall ESG Score: 2.9 (out of 4)
Last Updated: 29 July 2025
E Score: 3.0 (GOOD)
DXN has taken active steps to manage its environmental risks. It has established policies and procedures for responsible energy consumption management and scheduled waste disposal.
S Score: 2.7 (GOOD)
Promotes equality with career advancement based on merit regardless of race and gender. It supports employee development through sponsored training and engage in charitable activities like educational tours, direct donations, health contributions, disaster relief matching, and blood drives. In 2020, DXN launched the One Dollar One Child campaign, distributing free Spirulina to underprivileged children and encouraging member donations.
G Score: 3.0 (GOOD)
DXN has applied and adopted majority of the best practices of the Malaysian Code on Corporate Governance. The company boasts a diverse board of skilled directors, with women representing over 30% of the Board. It provides timely, consistent, and accurate information to shareholders.
ESG Rating History
The ESG rating has been consistently 2.9 from Jul-23 to Jul-25.
Results At a Glance
| FYE Feb (MYRm) | 1QFY25 | 4QFY25 | 1QFY26 | QoQ (%) | YoY (%) | Comments |
|---|---|---|---|---|---|---|
| Revenue | 475.1 | 458.9 | 479.1 | 4.4 | 0.8 | Flat YoY due to the strengthened MYR and currency crisis in Bolivia |
| EBITDA | 151.9 | 147.8 | 139.5 | (5.7) | (8.2) | |
| EBITDA Margin (%) | 32.0 | 32.2 | 29.1 | (3.1) | (2.9) | |
| Depreciation | (16.4) | (16.2) | (16.6) | 2.6 | 0.8 | |
| EBIT | 135.5 | 131.7 | 122.9 | (6.7) | (9.3) | 1QFY26 impacted by FX losses of MYR9.6m |
| EBIT Margin (%) | 28.5 | 28.7 | 25.7 | (3.0) | (2.9) | |
| Net finance costs | 0.9 | 0.3 | 0.2 | |||
| Pretax profit | 136.3 | 132.0 | 123.1 | (6.7) | (9.7) | |
| Pretax Margin (%) | 28.7 | 28.8 | 25.7 | (3.1) | (3.0) | |
| Tax | (49.2) | (47.6) | (46.6) | (2.0) | (5.3) | Due to withholding tax and high tax rates in some of the key operating markets |
| Effective tax rate (%) | (36.1) | (36.0) | (37.9) | 1.9 | 1.8 | |
| Minority interests | 1.5 | (0.2) | 2.6 | |||
| Net profit | 85.6 | 84.7 | 73.9 | (12.8) | (13.6) | At 19% of our and consensus forecasts |
| Net Margin (%) | 18.0 | 18.5 | 15.4 | (3.0) | (2.6) | DPS of 0.9 sen was declared (1QFY25: 0.9 sen) |
Recommendation Chart
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-04-30 | Buy | 0.88 | 0.52 |
| 2024-10-25 | Buy | 0.88 | 0.59 |
| 2024-04-24 | Buy | 0.93 | 0.63 |
| 2023-10-31 | Buy | 0.93 | 0.67 |
Financial Exhibits
Key drivers
- New market ventures;
- Innovative product launches;
- Capacity expansion.
Key risks
- Major delay in expansion plans;
- Unfavourable regulatory changes;
- Country risks.
Company Profile
DXN Holdings is principally involved in the sales of health-orientated and wellness consumer products through a direct selling model. Other business activities include conducting laboratory testing services for third parties, offering of lifestyle products, and operating a café.
| Financial summary (MYR) | |||||
|---|---|---|---|---|---|
| Feb-24 | Feb-25 | Feb-26F | Feb-27F | Feb-28F | |
| Recurring EPS | 0.06 | 0.07 | 0.07 | 0.09 | 0.10 |
| DPS | 0.04 | 0.04 | 0.04 | 0.05 | 0.05 |
| BVPS | 0.26 | 0.25 | 0.29 | 0.34 | 0.39 |
| Return on average equity (%) | 27.8 | 25.8 | 26.6 | 28.8 | 28.0 |
| Valuation metrics | |||||
|---|---|---|---|---|---|
| Feb-24 | Feb-25 | Feb-26F | Feb-27F | Feb-28F | |
| Recurring P/E (x) | 7.84 | 7.65 | 6.95 | 5.59 | 4.98 |
| P/B (x) | 2.0 | 2.0 | 1.7 | 1.5 | 1.3 |
| FCF Yield (%) | 9.6 | 11.8 | 8.5 | 9.3 | 12.0 |
| Dividend Yield (%) | 7.1 | 7.3 | 7.2 | 9.0 | 10.0 |
| EV/EBITDA (x) | 4.98 | 4.56 | 4.25 | 3.40 | 2.99 |
| EV/EBIT (x) | 4.40 | 3.99 | 3.74 | 3.00 | 2.61 |
| Income statement (MYRm) | |||||
|---|---|---|---|---|---|
| Feb-24 | Feb-25 | Feb-26F | Feb-27F | Feb-28F | |
| Total turnover | 1,803 | 1,908 | 2,161 | 2,428 | 2,676 |
| Gross profit | 1,437 | 1,529 | 1,733 | 1,949 | 2,154 |
| EBITDA | 426 | 454 | 479 | 594 | 657 |
| Depreciation and amortisation | 56 | 65 | 65 | 78 | 96 |
| Operating profit | 482 | 518 | 544 | 673 | 753 |
| Net interest | (3) | 4 | 2 | 6 | 7 |
| Pre-tax profit | 479 | 523 | 547 | 678 | 760 |
| Taxation | (155) | (187) | (177) | (220) | (246) |
| Reported net profit | 311 | 329 | 362 | 451 | 505 |
| Recurring net profit | 321 | 329 | 362 | 451 | 505 |
| Cash flow (MYRm) | |||||
|---|---|---|---|---|---|
| Feb-24 | Feb-25 | Feb-26F | Feb-27F | Feb-28F | |
| Change in working capital | 29 | 100 | (60) | 10 | 7 |
| Cash flow from operations | 361 | 445 | 365 | 533 | 602 |
| Capex | (119) | (148) | (150) | (300) | (300) |
| Cash flow from investing activities | (97) | (67) | (150) | (300) | (300) |
| Dividends paid | (105) | (184) | (181) | (225) | (253) |
| Cash flow from financing activities | (113) | (201) | (280) | (220) | (246) |
| Cash at beginning of period | 459 | 633 | 672 | 607 | 620 |
| Net change in cash | 152 | 178 | (65) | 14 | 56 |
| Ending balance cash | 611 | 811 | 607 | 620 | 676 |
| Balance sheet (MYRm) | |||||
|---|---|---|---|---|---|
| Feb-24 | Feb-25 | Feb-26F | Feb-27F | Feb-28F | |
| Total cash and equivalents | 642 | 681 | 616 | 630 | 686 |
| Tangible fixed assets | 753 | 734 | 819 | 1,041 | 1,245 |
| Total assets | 2,099 | 2,099 | 2,243 | 2,536 | 2,847 |
| Short-term debt | 162 | 151 | 50 | 50 | 50 |
| Total long-term debt | 3 | 4 | 4 | 4 | 4 |
| Total liabilities | 741 | 749 | 712 | 780 | 838 |
| Total equity | 1,358 | 1,350 | 1,531 | 1,756 | 2,009 |
| Total liabilities & equity | 2,099 | 2,099 | 2,243 | 2,536 | 2,847 |
| Key metrics | |||||
|---|---|---|---|---|---|
| Feb-24 | Feb-25 | Feb-26F | Feb-27F | Feb-28F | |
| Revenue growth (%) | 12.6 | 5.8 | 13.2 | 12.4 | 10.3 |
| Recurrent EPS growth (%) | 6.5 | 2.4 | 10.0 | 24.5 | 12.1 |
| Gross margin (%) | 79.7 | 80.1 | 80.2 | 80.3 | 80.5 |
| Operating EBITDA margin (%) | 23.6 | 23.8 | 22.2 | 24.5 | 24.6 |
| Net profit margin (%) | 17.2 | 17.2 | 16.8 | 18.6 | 18.9 |
| Dividend payout ratio (%) | 57.7 | 56.1 | 50.0 | 50.0 | 50.0 |
| Capex/sales (%) | 6.6 | 7.7 | 6.9 | 12.4 | 11.2 |
| Interest cover (x) | 36.0 | 51.4 | 80.4 | 193.4 | 216.6 |
RHB Guide to Investment Ratings
| Buy: | Share price may exceed 10% over the next 12 months |
|---|---|
| Trading Buy: | Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain |
| Neutral: | Share price may fall within the range of +/- 10% over the next 12 months |
| Take Profit: | Target price has been attained. Look to accumulate at lower levels |
| Sell: | Share price may fall by more than 10% over the next 12 months |
| Not Rated: | Stock is not within regular research coverage |
Investment Research Disclaimers
RHB has issued this report for information purposes only. This report is intended for circulation amongst RHB and its affiliates’ clients generally or such persons as may be deemed eligible by RHB to receive this report and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. This report is not intended, and should not under any circumstances be construed as, an offer or a solicitation of an offer to buy or sell the securities referred to herein or any related financial instruments.
This report may further consist of, whether in whole or in part, summaries, research, compilations, extracts or analysis that has been prepared by RHB’s strategic, joint venture and/or business partners. No representation or warranty (express or implied) is given as to the accuracy or completeness of such information and accordingly investors should make their own informed decisions before relying on the same.
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to the applicable laws or regulations. By accepting this report, the recipient hereof (i) represents and warrants that it is lawfully able to receive this document under the laws and regulations of the jurisdiction in which it is located or other applicable laws and (ii) acknowledges and agrees to be bound by the limitations contained herein. Any failure to comply with these limitations may constitute a violation of applicable laws.
All the information contained herein is based upon publicly available information and has been obtained from sources that RHB believes to be reliable and correct at the time of issue of this report. However, such sources have not been independently verified by RHB and/or its affiliates and this report does not purport to contain all information that a prospective investor may require. The opinions expressed herein are RHB’s present opinions only and are subject to change without prior notice. RHB is not under any obligation to update or keep current the information and opinions expressed herein or to provide the recipient with access to any additional information. Consequently, RHB does not guarantee, represent or warrant, expressly or impliedly, as to the adequacy, accuracy, reliability, fairness or completeness of the information and opinion contained in this report. Neither RHB (including its officers, directors, associates, connected parties, and/or employees) nor does any of its agents accept any liability for any direct, indirect or consequential losses, loss of profits and/or damages that may arise from the use or reliance of this research report and/or further communications given in relation to this report. Any such responsibility or liability is hereby expressly disclaimed.
