PETALING JAYA: Despite resilient demand in its consumer and healthcare segments, DKSH Holdings
(Malaysia) Bhd’s (DKSH) distribution-led growth momentum is expected to moderate, particularly if global geopolitical uncertainty persists.
In a note, Affin Hwang Investment Bank Research said extended geopolitical tensions could lead DKSH’s principals to take a more cautious approach towards inventory loading, promotional spending and expansion, resulting in more tempered sales growth moving forward.
“While logistics costs remain manageable for now, supported by fleet card arrangements and subsidised fuel quotas, prolonged oil price volatility could still place pressure on DKSH’s broader distribution and supply chain cost structure over time,” it said.
The research house said the company’s core net profit of RM50.1mil for the first quarter ended March 31 of the financial year 2026 (1Q26), was generally in line with expectations, coming in at 27% of its full-year forecasts as well as consensus estimates.
The reported core net profit represents a 6.4% year-on-year (y-o-y) increase, largely driven by stronger sales growth of 6.1% y-o-y, with all of its segments recording positive topline growth.
DKSH’s revenue for the quarter was RM2.35bil, up from RM2.22bil in 1Q25.
Its consumer goods segment and healthcare segments grew y-o-y by 6.2% and 6%, respectively, supported by contributions from both existing and newly secured clients.
Meanwhile, the company’s “others” segment also saw an y-o-y sales increase of 2.9%, mainly driven by outlet expansion.
“On margins, both the consumer goods and healthcare segments remained stable, while the others segment slipped into losses due to higher operating expenses,” it said.
The research house maintained its “hold” recommendation on the stock, and lowered its 12-month target price to RM6.06.
It said the revised target price was derived after rolling forward its valuation to the financial year 2027 and applying a lower earnings multiple to reflect a more cautious outlook on growth momentum.
This was due to potential moderation in principal ordering behaviour amid prolonged geopolitical conflict, and limited margin expansion visibility in light of possible higher cost pressures.
“Additionally, the group’s low-margin distribution model also leaves limited room for execution missteps in a higher-cost environment,” it noted.
It added that further upside and downside risks include better or worse-than-expected execution in growing existing clients and onboarding new clients, product and service mix on margins, and higher or lower-than-expected import costs and operating expenses.
Affin Hwang Research said it made no changes to earnings forecasts, as DKSH’s quarterly results remained within its estimates.
