A MEMBER OF THE TA GROUP
*THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*
FBMKLCI: 1,588.21
Sector: Consumer
Amway (Malaysia) Holdings Berhad
A Cautious FY25
Last Traded: RM5.03
SELL (ESG: )
yjliew@ta.com.my
Review
- Amway’s 2QFY25 results fell short of expectations. 1HFY25 core net profit of RM15.8mn made up only 24% of ours and 28% of consensus’ full-year estimates. The weak performance was mainly driven by softer-than-expected sales volume and EBIT in 2Q.
- For 2Q, revenue declined 10.0% YoY to RM266.7mn, mainly impacted by softer demand for both home appliances and health & wellness products. Quarterly core earnings contracted sharply by 89.0% YoY, due to i) subdued demand amid elevated product costs, which compressed GP margin to 19.5% (-6.2p.p. YoY), ii) a 19.6% YoY increase in selling and distribution expenses to RM35.2mn, and iii) a higher effective tax rate of 34.6% (+9.6p.p. YoY) arising from non-tax-deductible expenses.
- As a result of the muted 2Q performance, 1HFY25 revenue declined 9.3% YoY, while core earnings plunged 71.5% YoY.
- A second single-tier interim dividend of 5.0sen/share was declared for 2QFY25, in line with 2QFY24.
Impact
We revised our FY25-27F earnings to RM31.5/35.3/38.2mn from RM65.5/69.9/73.7mn, respectively. The downward revision reflects an 8.6% increase in selling and distribution cost assumptions and a 6.2% cut in sales forecasts over FY25-27F.
Outlook
- We expect a gradual recovery in demand in 2HFY25, supported by more effective promotional and marketing initiatives alongside improving consumer sentiment compared to 1HFY25. Nevertheless, the overall FY25 outlook remains subdued, dampened by the weak performance in 1H.
Valuation
- Given the subdued earnings outlook, we project a lower dividend yield of 4.0-5.0% for FY25-27F. Consequently, we downgrade Amway to SELL with a lower TP of RM5.00/share (from RM5.40/share), based on a DDM valuation (k: 9.3%, g: 2.0%).
| Share Information | AMW MK | |
|---|---|---|
| Bloomberg Code | AMW MK | |
| Stock Code | 6351 | |
| Listing | Main Market | |
| Share Cap (mn) | 164.4 | |
| Market Cap (RMmn) | 826.9 | |
| 52-wk Hi/Lo (RM) | 6.643/4.52 | |
| 12-mth Avg Daily Vol (‘000 shrs) | 46.9 | |
| Estimated Free Float (%) | 20.1 | |
| Beta | 0.5 | |
| Major Shareholders (%) | ||
| Amway Global Development | 51.7 | |
| Skim Amanah Saham Bumiputra | 17.3 | |
| Kumpulan Wang Persaraan | 8.9 | |
| Employees Provident Fund | 6.0 | |
| Forecast Revision | FY25 | FY26 |
|---|---|---|
| Forecast Revision (%) | (51.9) | (49.5) |
| Adj. Net Profit (RM mn) | 31.5 | 35.3 |
| Consensus | 57.3 | 63.1 |
| TA’s / Consensus (%) | 55.1 | 56.0 |
| Previous Rating | Hold (Downgraded) | |
| Consensus Target Price (RM) | 5.27 | |
| Financial Indicators | FY25 | FY26 |
|---|---|---|
| Net Gearing | Net cash | Net cash |
| ROE (%) | 10.4 | 11.6 |
| ROA (%) | 5.9 | 6.5 |
| NTA/Share (RM) | 1.8 | 1.9 |
| Price/NTA (x) | 2.7 | 2.7 |
| Scorecard | % of FY | |
|---|---|---|
| vs TA | 24 | Below |
| vs Consensus | 28 | Below |
| Share Performance (%) | AMWAY | FBM KLCI |
|---|---|---|
| Price Change | ||
| 1 mth | 1.8 | 4.2 |
| 3 mth | (9.9) | 2.7 |
| 6 mth | (21.9) | 0.8 |
| 12 mth | (23.2) | (3.2) |
(12-Mth) Share Price relative to the FBMKLCI
Source: Bloomberg
Table 1: Earnings Summary (RM’mn)
| FYE Dec 31 (RM’mn) | FY23 | FY24 | FY25E | FY26F | FY27F | |
|---|---|---|---|---|---|---|
| Revenue | 1,408.3 | 1,217.2 | 1,118.7 | 1,135.6 | 1,152.7 | |
| Gross Profit | 348.7 | 306.7 | 223.7 | 231.5 | 239.6 | |
| EBITDA | 160.3 | 132.2 | 56.0 | 58.0 | 59.4 | |
| Adj. EBIT | 153.3 | 123.2 | 35.6 | 39.6 | 42.6 | |
| Reported PBT | 152.7 | 129.1 | 41.2 | 46.4 | 50.2 | |
| Reported Net Profit | 116.0 | 96.3 | 31.5 | 35.3 | 38.2 | |
| Adj. Net Profit | 123.9 | 98.2 | 31.5 | 35.3 | 38.2 | |
| EPS | (sen) | 70.6 | 58.6 | 19.2 | 21.5 | 23.2 |
| Adj. EPS | (sen) | 75.3 | 59.7 | 19.2 | 21.5 | 23.2 |
| PER | (x) | 6.7 | 8.4 | 26.2 | 23.4 | 21.7 |
| Dividend/share | (sen) | 60.0 | 60.0 | 20.0 | 22.0 | 25.0 |
| Div. Yield | (%) | 11.9 | 11.9 | 4.0 | 4.4 | 5.0 |
Table 2: 2QFY25 Results Analysis (RM’mn)
| FYE Dec 31 (RM’mn) | 2QFY24 | 1QFY25 | 2QFY25 | QoQ (%) | YoY (%) | 1HFY24 | 1HFY25 | YoY (%) | |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 296.4 | 294.3 | 266.7 | (9.4) | (10.0) | 618.5 | 561.0 | (9.3) | |
| COGS | (220.3) | (233.5) | (214.6) | 8.1 | 2.6 | (455.3) | (448.0) | 1.6 | |
| Adj. EBIT | 29.4 | 16.4 | 1.0 | (94.1) | (96.7) | 69.8 | 17.4 | (75.1) | |
| Extra-ordinary items | 1.4 | (0.0) | (0.1) | >-100 | nm | 1.9 | (0.1) | nm | |
| Net finance income | 2.0 | 1.3 | 2.9 | >100 | 42.8 | 4.2 | 4.2 | (1.5) | |
| Profit Before Tax | 32.8 | 17.7 | 3.7 | (79.0) | (88.6) | 76.0 | 21.4 | (71.8) | |
| Adj. PBT | 31.4 | 17.7 | 3.8 | (78.3) | (87.8) | 74.0 | 21.5 | (70.9) | |
| Taxation | (8.2) | (4.5) | (1.3) | 71.2 | 84.3 | (18.7) | (5.8) | 69.1 | |
| Reported Net Profit | 24.5 | 13.2 | 2.4 | (81.6) | (90.1) | 57.3 | 15.6 | (72.7) | |
| Adj. Net Profit | 23.2 | 13.2 | 2.5 | (80.8) | (89.0) | 55.3 | 15.8 | (71.5) | |
| EPS | (sen) | 14.9 | 8.0 | 1.5 | (81.6) | (90.1) | 34.8 | 9.5 | (72.7) |
| Adj. EPS | (sen) | 14.1 | 8.0 | 1.5 | (80.8) | (89.0) | 33.7 | 9.6 | (71.5) |
| DPS | (sen) | 5.0 | 5.0 | 5.0 | 10.0 | 10.0 | |||
| %-points | %-points | %-points | |||||||
| Adj. EBIT Margin | (%) | 9.9 | 5.6 | 0.4 | (5.2) | (9.5) | 11.3 | 3.1 | (8.2) |
| Adj. PBT Margin | (%) | 10.6 | 6.0 | 1.4 | (4.6) | (9.1) | 12.0 | 3.8 | (8.1) |
| Adj. Net Margin | (%) | 7.8 | 4.5 | 1.0 | (3.5) | (6.9) | 8.9 | 2.8 | (6.1) |
| Effective Tax Rate | (%) | 25.1 | 25.3 | 34.6 | 9.3 | 9.6 | 24.6 | 26.9 | 2.3 |
Table 3: Valuation Method
| DDM Valuation | |
|---|---|
| Rf | 3.8% |
| Rm | 11.5% |
| Beta | 0.7 |
| Discount Rate | 9.3% |
| Total NPV (RM mn) | 821.9 |
| Share Outstanding (mn share) | 164.4 |
| DDM/share | 5.00 |
| (+) ESG Premium | 0.00 |
| DDM/share | 5.00 |
Sector Recommendation Guideline
OVERWEIGHT: The total return of the sector, as per our coverage universe, exceeds 12%.
NEUTRAL: The total return of the sector, as per our coverage universe, is within the range of 7% to 12%.
UNDERWEIGHT: The total return of the sector, as per our coverage universe, is lower than 7%.
Stock Recommendation Guideline
BUY : Total return of the stock exceeds 12%.
HOLD : Total return of the stock is within the range of 7% to 12%.
SELL : Total return of the stock is lower than 7%.
Not Rated: The company is not under coverage. The report is for information only.
Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.
Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.
ESG Scoring & Guideline
| Scoring | Environmental | Social | Governance | Average |
|---|---|---|---|---|
| Remark | Notable efforts in reducing paper usage and take charge in recycling packaging materials. It has established Vendor Management & Procurement Practice to ensure sustainable supply. However, score is muted owing to absence of quantifiable goal for near future. | Contributed to both local and global social cause via The Nutrilite Power of 5 campaigns. Extensive safety training over OSHA and multiple leadership workshops. | The board is represented by 50% independent directors and has decent gender diversity. Amway has targeted dividend payout of 80%. |
- (≥80%): Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions. +5% premium to target price
- (60-79%): Above adequate integration of ESG factors into most aspects of operations, management and future directions. +3% premium to target price
- (40-59%): Adequate integration of ESG factors into operations, management and future directions. No changes to target price
- (20-39%): Have some integration of ESG factors in operations and management but are insufficient. -3% discount to target price
- (<20%): Minimal or no integration of ESG factors in operations and management. -5% discount to target price
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.
As of Thursday, August 21, 2025, the analyst, Liew Yi Jiet, who prepared this report, has interest in the following securities covered in this report:
(a) nil
Kaladher Govindan – Head of Research
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