PETALING JAYA: Margins at Amway (M) Holdings Bhd
are expected to remain under pressure moving forward as weaker discretionary spending and softer demand for higher-priced consumer products continue to weigh on the company’s earnings outlook.
CIMB Research remains cautious on Amway’s near-term prospects amid subdued consumer sentiment and the continued prioritisation of essential spending by households.
The research house noted that demand for higher-margin categories such as home appliances and personal care products would likely remain soft as consumers increasingly trade down to cheaper alternatives or defer purchases altogether.
“Recent observations and market feedback suggest consumers are likely to prioritise daily essentials over more discretionary, big-ticket Amway products,” CIMB Research said.
It noted that although a stronger ringgit could help lower US dollar-denominated import costs and ongoing cost-discipline measures may cushion margins, lower operating leverage and a weaker sales mix would continue to pose challenges.
It expects the financial year ending Dec 31, 2026 (FY26), core net profit to decline 6.3% year-on-year, due mainly to weaker sales and a less-profitable product mix.
It also lowered its FY26 to FY28 earnings forecasts by between 10.6% and 17.3% to reflect a more subdued spending outlook in the coming quarters.
CIMB Research maintained its “reduce” call on the stock with a lower dividend discount model-based target price of RM4.05 from RM4.15 previously.
The research house also expressed caution over the longer-term sustainability of Amway’s dividend payouts despite forecast yields of 5.8% for FY26 to FY28, citing weakening earnings profile and softer brand traction among consumers.
Meanwhile, TA Research said profitability would continue to be weighed down by persistent cost pressures and fragile consumer sentiment.
The research house noted that the company has initiatives to enhance member productivity and retain its core sales force, including an upcoming Youth Rally programme targeting younger consumers in the sports nutrition and fitness segments.
Nevertheless, TA Research believes operating challenges are likely to persist, especially with elevated operating expenses and softer demand trends continuing into FY26.
The research house cut its FY26 to FY28 earnings forecasts by 32.2% to 34.5% after lowering its sales and margin assumptions.
It maintained its “sell” recommendation on the stock and revised its target price lower to RM4.84 from RM4.95 per share previously.
