KOTRA
Kotra Industries Berhad
Company Background
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by CGS
Reduce - TP RM3.70
"Slightly stronger end to a weak FY24"
■ FY6/24 core net profit came in at RM51.1m, above expectations as higher revenue and better margins more than offset higher effective tax rate.
■ Its domestic supplement sales improved slightly in 4QFY24, but still at low levels overall with domestic pharmaceutical demand also weakening.
■ Reiterate Reduce as we expect Kotra’s earnings to decline further in FY25F, due to normalising tax rates, before rebounding in FY26F.
Analysts:
LEW Cheng Wei
chengwei.lew@cgsi.com
Dharmini THURAISINGAM
dharmini@cgsi.com
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD) Industries
Research by Kenanga
OUTPERFORM – TP RM5.35
" Operating Performance Improves QoQ”
KOTRA’s FY24 results met expectations. Its FY24 core net profit declined 32% on reduced sales and the resulting loss of operating leverage, coupled with absence of deferred tax benefit. However, we remain upbeat on KOTRA on recovering consumer spending, taking encouragement from QoQ sales rise. We maintain our forecasts and TP of RM5.35, reiterating our OUTPERFORM call. The stock offers a 6% dividend yield.
Analyst:
Raymond Choo Ping Khoon
pkchoo@kenanga.com.my
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by RHB
Neutral – TP RM 4.30
" A Disappointing Quarter”
FY24 (Jun) earnings were below our and Street’s expectations due to the normalising demand trend towards health supplement products. While Malaysia’s economic growth is set to expand in 2H24 (as suggested by our economics team), we think Kotra Industries’ near-term earnings recovery should remain choppy given a potentially higher effective tax ahead (in the absence of tax losses to be recognised) and normalising consumer demand for health supplement products.
Analyst:
Oong Chun Sung
chun.sung@rhbgroup.com
The Edge's Centurion Club Awards 2024 sees $HARBOUR / 2062 (HARBOUR-LINK GROUP BERHAD) as the Centurion of the Year for 2024. This comes after Harbour was also shortlisted as one of Forbes' Best under a Billion club not long ago, which hopefully should put them on the radar of more people to look into and study their business.
Other companies that scored a triple winner on their respective categories (Highest RoE, highest growth in PAT, and highest returns to shareholders) in their sector include $DELEUM / 5132 (DELEUM BERHAD) $KOTRA / 0002 (KOTRA INDUSTRIES BERHAD) and $REDTONE / 0032 (REDTONE INTERNATIONAL BERHAD) .
The award is evaluated based on the the scoring criteria of return to shareholders (30% weightage); PAT growth (40%); and ROE (30%) over three years.
While harbour is probably not likely to win this award again soon, as they are coming off of unprecedented freight rates in 2023 (and thus the benchmark they will have to compare with is unrealistically high in a normal business environment), I think they will still score rather well in general.
Anyhow, congratulations to all the winning companies! Are any of them part of your investment portfolios? The award winners could be a good place to start as a shortlist for further study.
1/2
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by CGS
Reduce – TP of MYR 3.70
“Lacks near-term growth catalysts”
We downgrade Kotra from Hold to Reduce, with a lower GGM-based TP of RM3.70 (COE: 9.4%; TG: 3%; from RM5.19), as we believe that there are no visible catalysts in the near term to lift Kotra’s earnings. At 14.9x CY24F P/E, Kotra is currently trading at 1 s.d. above its mean P/E of 11.6x since CY16 (earnings turned positive since CY16) in light of our declining earnings expectations. In the healthcare ex-hospitals space, we prefer Optimax (ADD, TP: RM0.84, CP: RM0.69) for its FY23-25F net profit CAGR of 12.7%, supported by yields of 2-3%.
Analyst(s):
LEW Cheng Wei
chengwei.lew@cgsi.com
Dharmini THURAISINGAM
dharmini@cgsi.com
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by RHB
Neutral – TP of MYR 5.00
“In Rough Water; Downgrade To NEUTRAL”
9HFY24 (Jun) earnings came in below our and Street’s expectations – attributed to the slowdown in consumer demand for supplement products in the local market. While Malaysia’s economic growth is set to accelerate in 2Q24 and 3Q24 (as suggested by our economics team), we think Kotra Industries’ near-term earnings recovery should remain choppy, given the potentially higher effective tax (in the absence of tax losses to be recognised moving forward) and slowing consumption trend.
Analyst(s):
Oong Chun Sung
chun.sung@rhbgroup.com
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by Kenanga
Outperform – TP of MYR 5.35
“Operating Performance Improves QoQ”
KOTRA’s 9MFY24 results disappointed. Its 9MFY24 core net profit declined 39% on reduced sales and the resulting deterioration of operating scale, coupled with a higher tax. However, we remain upbeat on KOTRA given recovering consumer spending. We cut our FY24-25F net profit forecasts by 13% and 9%, respectively, reduce our TP by 9% to RM5.35 (from RM5.90) but reiterate our OUTPERFORM call.
Analyst(s):
Raymond Choo Ping Khoon
pkchoo@kenanga.com.my
Quarterly rpt on consolidated results for the financial period ended 31/03/2024
HEALTH CARE
$IHH / 5225 (IHH HEALTHCARE BERHAD) $KPJ / 5878 (KPJ HEALTHCARE BERHAD) $DPHARMA / 7148 (DUOPHARMA BIOTECH BERHAD) $KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by RHB
Overweight (Maintained)
“A Decent Showing; Still OVERWEIGHT”
We expect demand for private healthcare to be underpinned by encouraging growth from medical tourists, a growing number of non-communicable diseases (NCD), and ageing society trends. While the healthcare sector generally has defensive attributes, we continue to advocate for investors to lean towards domestic-centric names as these provide better earnings stability.
Analyst(s):
Oong Chun Sung
chun.sung@rhbgroup.com
PETALING JAYA: The mid to longer-term prospects of Kotra Industries Bhd are expected to be anchored by rising health awareness among consumers and the ageing society trend.
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by Kenanga
Outperform - TP of RM5.90
"A Soft Patch, Pinning Hopes on OTC"
KOTRA’s 1HFY24 results disappointed as consumers held back purchases on weak spending sentiment. However, we remain upbeat on KOTRA, driven by a growing domestic over-the-counter (OTC) market. We cut our FY24-25F net profit forecasts by 16% and 9%, respectively, reduce our TP by 2% to RM5.90 (from RM6.03) but reiterate our OUTPERFORM call.
Analyst(s):
Raymond Choo Ping Khoon
pkchoo@kenanga.com.my
KOTRA - Notice of Book Closure
Quarterly rpt on consolidated results for the financial period ended 31/12/2023
Interim Dividend
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by CGS CIMB
Hold (No Change) – Target Price RM5.19
“Long-term ROEs to normalise post Covid-19”
■ In our view, weak demand for OTC supplements post-Covid-19 could lead to Kotra’s core profit declining in FY6/24F before rebounding in FY25F/FY26F.
■ After declining in FY22-23F, we expect long-term ROE to hold steady at c.18% in FY25F-26F due to better economies of scale.
■ Reiterate Hold, with a lower GGM-based (previously P/E-based) TP of RM5.19. This note marks the transfer of coverage to Lew Cheng Wei.
Analysts:
LEW Cheng Wei
chengwei.lew@cgs-cimb.com
Dharmini THURAISINGAM
dharmini@cgs-cimb.com
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by RHB
Buy (Maintain) – Target Price RM5.40
“Potential Benefit From Spike In COVID-19 Infections”
BUY, new TP of MYR5.40 from MYR5.60, 16% upside with c.5% FY25 (Jun) yield. Kotra Industries (Kotra) should be a major beneficiary of pent-up consumer demand for neutraceutical products amid the recent resurgence of COVID-19 cases. Its over-the-counter (OTC) products (c.60% of its topline) offer immunity benefits to consumers at different stages of life. The stock is trading at 10x FY24F P/E, in line with its historical mean. We trim our ESG score to 3.1 from 3.2, after revisiting the metrics for all three pillars.
Analyst:
Malaysia Research
research.my.equity@rhbgroup.com
$KOTRA / 0002 (KOTRA INDUSTRIES BERHAD)
Research by Kenanga
Outperform – Target Price RM6.03
“A Soft Patch, OTC to Drive Earnings”
KOTRA’s 1QFY24 results disappointed as consumers held back purchases, having overstocked right after the economy reopening. However, we remain upbeat on KOTRA driven by a growing domestic over-the-counter (OTC) market. We cut our FY24-25F net profit forecasts by 14% and 13%, respectively, reduce our TP by 14% to RM6.03 (from RM7.00) but reiterate our OUTPERFORM call.
Analyst:
Raymond Choo Ping Khoon
pkchoo@kenanga.com.my
Quarterly rpt on consolidated results for the financial period ended 30/09/2023
General Meetings: Outcome of Meeting
(part 2) - Stocks in Radar.
As an extension of the previous post found here: https://cutt.ly/cwE4DolO, here are another 5 companies that also passed the screening:
• $KUB / 6874 (KUB MALAYSIA BERHAD); an investment holding company listed on the Main Market of Bursa Malaysia Securities Berhad, comprising businesses with established reputations across the LPG, Agro and ICT spaces, amongst others. KUB’s history as an entity dates back to 1996, when Koperasi Usaha Bersatu Malaysia Berhad executed a reverse takeover of Permodalan Perak Berhad, a company listed on the Bumiputera Stock Exchange. The entity then changed its name to KUB Malaysia Berhad and was listed on The Main Board of KLSE (now Bursa Malaysia) in 1997.
• $ATECH / 5302 (AURELIUS TECHNOLOGIES BERHAD); ATech was incorporated in Malaysia as a private limited company. The principal activity of ATech is investment holding whilst its subsidiary BCM Electronics Corporation Sdn. Bhd., is principally a provider of EMS with a focus in industrial electronic products. In 2019, ATech Group expanded its activities into the manufacturing of semiconductor components in the form of multicomponent IC for IoT applications. The ATech Group commenced mass production of these semiconductor components in the FYE 31 January 2021.
• $PECCA / 5271 (PECCA GROUP BERHAD); Pecca Group Berhad‘s principal business activities are in the styling, manufacturing, distribution, and installation of leather upholstery for car seat covers, as well as, the supply of leather cut pieces to the automotive leather upholstery industry. The company is founded and managed by a team of leather goods manufacturers with over 25 years of experience in leather craftsmanship. The founder's experience in contract manufacturing includes supplies to official licensees of internationally renowned brands for small leather goods.
• $VS / 6963 (V.S. INDUSTRY BERHAD); V.S. Industry Berhad (VS) was founded in 1982 and listed on the Main Market of Bursa Malaysia Securities Berhad in 1998. Today, VS is a leading integrated Electronics Manufacturing Services (EMS) provider in the region, with proven capabilities to undertake the manufacturing needs of global brand names for office and household electrical and electronic products.
• $KOTRA / 0002 (KOTRA INDUSTRIES BERHAD); For over 39 years, Kotra Pharma has earned a rightful place in the pharmaceutical industry as well as among healthcare professionals, patients, consumers and in the homes of thousands of families based on genuine trust placed in our products. As a global industry player, the company have also established their market presence in more than 30 countries.
I hope that with this screening, this post can help enhance insights in stock selection. Please comment if there is a more effective screening method than this.
KUALA LUMPUR: Pharmaceutical and healthcare products manufacturer Kotra Industries Bhd (KIB) is actively seeking to partner with companies with a strong presence in biopharmaceuticals to expand its product range to cater to domestic and international markets.
© New Straits Times Press (M) Bhd
Annual Report & CG Report - 2023
Kotra Industries Berhad - Proposed Renewal of Shareholders' Mandate for Existing Recurrent Related Party Transactions of a Revenue or Trading Nature
General Meetings: Notice of Meeting