PETALING JAYA: Beverage company Power Root Bhd
’s core earnings are expected to bottom this year before rebounding next year due to higher raw-material costs and a slower recovery for its earnings, export sales.
CGS International (CGSI) Research said it is still positive on Power Root’s local revenue growth but believes the struggles with its export markets will continue for the rest of this year.
Its Middle East sales were expected to stay flat, before recovering to 2023’s levels in next year as it replaces its distributor in Saudi Arabia again, and looks to cooperate with other distributors.
CGSI Research said the company had managed to lock in pricing for most of its raw materials till next March, though it remains higher than expected.
The research house said it expected Power Root to only deliver a three-year compounded annual growth rate (CAGR) of 2% in core profit from 2024 to 2027, supported by steady local revenue growth and stabilising input costs.
Its local revenue is expected to expand at a three-year CAGR of 8% in the same period, buoyed by improved macroeconomic trends fuelling improved consumer sentiment and spending.
The research house maintained its “hold” call for the stock with a lower target price of RM1.34 as it believes a recovery in earnings had been priced in by the market.
Power Root closed at RM1.38 yesterday.
