PETALING JAYA: DKSH Holdings (M) Bhd
’s prospects remain resilient and it is also a defensive stock play, distributing inelastic products across both consumer staples and healthcare segments, says Hong Leong Investment Bank (HLIB) Research.
In a report, the brokerage said DKSH’s customer relationship management (CRM) rollout and logistics optimisation initiatives are expected to enhance productivity and support margin expansion from the second half of 2026 (2H26) onwards following the completion of restructuring efforts.
“We also believe the group remains well-insulated from geopolitical and commodity-related disruptions, given its exposure to inelastic healthcare and consumer staples products and recurring long-term contracts,” it said after a recent meeting with DKSH’s management team.
The key highlights from the meeting include the group’s aggressive future-proofing of its operating margins through a two-pronged strategy focused on digital transformation and structural supply chain reorganisation.
DKSH is currently executing a global rollout of its artificial intelligence-powered CRM platforms (Eurus and Connect Plus) – already live in its healthcare segment and slated for full Consumer Goods integration by 2H26 – which leverages predictive analytics and real-time GPS tracking to optimise sales force routing, maximise frontline productivity, and sharpen client-trend insights.
Concurrently, management is streamlining its Tapa-certified logistics network through a targeted headcount optimisation exercise and advanced route-planning efficiencies.
While the associated restructuring costs will temporarily impact near-term margins through the second quarter of 2026, its conclusion in 2H26 should unlock operational leverage and consequently, margin expansion.
Meanwhile, the group’s healthcare division also continues to demonstrate strong momentum, where recent 1H26 long-term partnership wins such as Pfizer, AbbVie, and Sanofi are expected to yield material earnings contributions from 2H26 onwards.
In addition, DKSH’s long-term growth is anchored by structural demographic tailwinds, namely an expanding middle class and an ageing population.
“These dynamics are projected to drive an 8.3% compounded annual growth rate in Malaysian healthcare expenditure through financial year 2028, outpacing the pre-pandemic average of 7.5%.
“On top of this, an accelerating shift toward corporate supply chain outsourcing is expected to serve as a strong catalyst for new client acquisition,” HLIB Research explained.
Looking ahead, the brokerage expects the group’s new healthcare partnerships, rising healthcare expenditure and increasing supply chain outsourcing to support sustainable earnings.
HLIB Research has maintained a “buy” call on DKSH with a higher target price of RM7.33 per share.
It continues to like DKSH for its defensiveness given a diverse product portfolio, encompassing both premium and affordable products, while being poised to capture the accelerating trend in healthcare expenditure.
