DXN Holdings (DXN MK): Maintain BUY on In-Line FY25 Results | MYR0.72 TP & >8% Yield | Maybank Analysis

Maybank Investment Bank Berhad April 30, 2025
DXN Holdings (DXN MK): Steady FY25 Performance Fuels BUY Rating Amid Latin American Expansion & Attractive Yields
DXN Holdings (DXN MK) reported fourth-quarter fiscal year 2025 (4QFY25) results that aligned with Maybank Investment Bank Berhad’s expectations. Looking ahead to FY26E, the company’s growth outlook hinges significantly on its ongoing expansion efforts within the Latin American region. Maybank maintains its earnings estimates and reiterates a BUY recommendation with an unchanged Target Price (TP) of MYR 0.72. This TP is derived from a constant 10 times CY25E Price-to-Earnings Ratio (PER), reflecting the average for domestic direct selling peers. Furthermore, DXN presents an appealing investment case with projected dividend yields exceeding 8% (based on an estimated 56% Dividend Payout Ratio for FY26-28E).

4QFY25 & FY25 Financial Performance: Resilience Amid Forex Headwinds

DXN’s net profit for 4QFY25 came in at MYR 85 million, marking a 7% increase year-over-year (YoY) but a 9% decrease quarter-over-quarter (QoQ). This brought the full-year FY25 net profit to MYR 329 million, representing a 2% YoY growth. These full-year earnings met 103% of Maybank’s forecast and 97% of the consensus estimates.
In conjunction with the results, DXN declared a fourth interim dividend per share (DPS) of 1 sen. This brings the year-to-date (YTD) DPS to 3.7 sen, slightly up from FY24’s 3.6 sen, and corresponds to a dividend payout ratio (DPR) of 56%, consistent with the 57% DPR in FY24.
The 4QFY25 earnings saw a YoY improvement primarily driven by lower operating expenditures (opex). While revenue experienced a slight decline of 3% YoY to MYR 458.9 million, mainly due to unfavourable foreign exchange (FX) movements resulting from the Malaysian Ringgit’s (MYR) appreciation against currencies in its key sales markets, the operating profit showed strength. 4QFY25 operating profit increased by 13% YoY, leading to an EBIT margin improvement of 3.9 percentage points YoY. This enhanced profitability was attributed to production efficiencies and reduced marketing-related expenses.
On a sequential basis, the 6% QoQ revenue decline was also predominantly caused by the appreciation of the MYR against foreign currencies where DXN generates sales. It is noteworthy that sales in Malaysia historically constitute less than 10% of the group’s total sales.

Results Summary

*FY24 One-off items included IPO expenses of MYR10.2m and an impairment loss of PPE of MYR2.3m. Source: Company, Maybank IBG Research

Latin America: The Engine for Future Growth

DXN’s earnings growth trajectory for FY26E, projected at +12% YoY, is primarily based on two factors:

• Continued performance in its established core markets, such as Peru, Bolivia, Mexico, and India.
• Incremental sales growth stemming from its recent strategic entries into new markets, specifically Brazil and Argentina. The group reports promising initial sales performance and member recruitment activities in these newer territories.

Valuation, Target Price, and Investment Recommendation

Maybank maintains its BUY rating on DXN Holdings with an unchanged target price of MYR 0.72. This valuation is based on 10 times the Calendar Year 2025 Estimated (CY25E) Price-to-Earnings ratio (PER), which is in line with the average valuation of its domestic direct selling peers. The current share price of MYR 0.51 suggests a potential upside of 48% to the target price.
A key attraction for investors is the compelling dividend yield. DXN is expected to offer yields exceeding 8% for the fiscal years FY26E through FY28E, based on an anticipated dividend payout ratio of 56%.

Company Snapshot & Stock Data

• Share Price: MYR 0.51
• 12m Price Target: MYR 0.72 (+48%)
• Previous Price Target: MYR 0.72
• Market Capitalisation: MYR 2.4B / USD 563M
• Issued Shares (m): 4,825
• 52w High/Low (MYR): 0.70 / 0.46
• Major Shareholders: LSJ Global Sdn Bhd (68.0%), Gano Global (13.3%)
• Company Description: DXN Holdings distributes consumer products globally under a direct selling model.

Price Performance

• -1M Absolute (%): 2
• -3M Absolute (%): (3)
• -12M Absolute (%): (19)
• -1M Relative to index (%): 1
• -3M Relative to index (%): (1)
• -12M Relative to index (%): (16)

Peer Analysis: DXN’s Position in the Direct Selling Landscape

When compared to its Malaysian direct selling peers, DXN appears attractively valued. Its CY25E PER of 7.0x is below the simple average of 10.6x for the peer group, while offering a strong Return on Average Equity (ROAE) and a competitive dividend yield.

Malaysia Direct Selling Sector Peer Comparison

*As at 29 Apr 2025 closing prices Source: Bloomberg, Maybank IBG Research

Key Risks to Consider

Potential risks impacting earnings estimates, the price target, and rating for DXN Holdings include:

• Geographic Concentration: A high concentration of sales in Latin America exposes the company to earnings volatility should any country-specific risks materialize in that region.
• Foreign Exchange Fluctuations: Given that over 90% of DXN’s sales are denominated in foreign currencies, a sharp depreciation in the US Dollar (USD) or Euro (EUR) against the Malaysian Ringgit (MYR) could adversely affect its reported earnings.

Financial Projections & Key Metrics Summary

The following tables provide a summary of DXN Holdings’ historical financial performance and Maybank IBG Research’s forecasts through FY28E.

Financial Highlights & Forecasts

Source: Company, Maybank IBG Research

Detailed Financial Statements & Metrics (FY24A – FY28E)

Key Metrics

INCOME STATEMENT (MYR m)

BALANCE SHEET (MYR m)

CASH FLOW (MYR m)

Key Ratios (FY24A – FY28E)

Growth ratios (%)

Profitability ratios (%)

DuPont analysis

Liquidity & Efficiency

Leverage & Expense Analysis

Source: Company; Maybank IBG Research