Kotra Industries to gain revenue CAGR of 9pc from FY23-FY25, says RHB Research

NST Fri, Nov 04, 2022 09:46am - 1 year View Original


KUALA LUMPUR: RHB Research expects Kotra Industries Bhd to book a revenue compounded annual growth rate (CAGR) of nine per cent over the financial years 2023 (FY23) to FY25, premised on resilient demand for its nutraceutical products and a gradual pick-up in export sales.

"The successful growth story of the company had also coincided with the growing healthcare spending per capita. 

"Apart from that, the increase of health awareness among consumers to improve immunity against Covid-19 and other non-communicable diseases (NCD) is expected to be the near-term re-rating catalyst in propelling the growth of over-the-counter (OTC) consumer healthcare products," the bank-backed research firm said. 

The research firm said that as export sales are denominated in US Dollar (USD) terms, this enables Kotra to capitalise on the strengthening USD. 

The firm also sees further room for growth, from exports recovering to pre-pandemic levels (accounting for 40-45 per cent of total revenue) following the reopening of country borders and stock replenishing by customers. 

"A 10 per cent appreciation in the USD would boost earnings by two per cent," it said.

RHB Research has initiated coverage on Kotra Industries with a Buy call and a target price of RM5.72.

"This is premised on our positive outlook – an expected recovery in export sales and a pick-up in OTC supplementary product sales due to rising health awareness, especially in post-pandemic times. 

"This is backed up by its proven track record (3-year earnings CAGR of 39 per cent from FY19-FY22), as well as its solid brand recognition," it added.

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