PETALING JAYA: CGS International (CGSI Research) has reiterated its “hold” recommendation on Beshom Holdings Bhd
with a revised target price of RM0.95 from RM0.93, adding that the group’s earnings growth outlook has already been priced in.
In a report, the research house said it tweaked its earnings estimates on the group, taking into consideration an overall stronger consumer spending outlook in Malaysia.
“We think the improving policy direction will be positive for Malaysia’s economic growth, with CGSI Research’s economics team forecasting gross domestic product growth of 5.2% and 4.4% in 2024 and 2025, respectively,” it said.
The research house said the improvement in consumer spending would most likely be due to the flexible withdrawal option from the Employees Provident Fund’s Account 3, the monthly cash handouts for the lower income households as well as the high civil servant and fresh graduate salaries.
“These measures will, in our view, improve spending on discretionary items, such as those sold by Beshom,” it noted.
The group is involved in selling herbal medicine and healthcare products.
For its financial year 2024 (FY24), Beshom registered a core profit of RM11.4mil, which was above CGSI Research’s expectation of 107.2% of its estimate, and 100.8% of Bloomberg’s consensus.
The research house said the earnings beat was largely due to lower-than-expected tax expenses in the fourth quarter of this year.
Beshom’s multi-level marketing (MLM) segment has continued to see stiff competition from new MLM players, resulting in sub-optimal member response to its promotional campaigns in FY24.
