DXN Holdings Berhad is the investment holding and management company of DXN Group. DXN´s high regard for quality earned the company many outstanding citations and recognitions from various health and business organizations. Along with the solid foundation and sustainable development, DXN has rapidly diversified into other business activities, which include property, renewable energy, information technology, etc. In its core business of network marketing, the rapid global expansion of DXN is recognized internationally by its vast growth of members worldwide and its amplification of footprint in key strategic locations. With over four million registered distributors worldwide, DXN is solidifying its position as the world leader in Ganoderma products.
I actually knew about this company quite sometimes ago, long before i actually invested in stock market. Is because my girl friend is one of the leader in DXN network marketing
. She had been staying with DXN for >7 years now, and enjoying handsome passive income.So actually i'm quite familiar with the network system DXN is using, and with the system, i believe that the network marketing segment will continue to boom around the world. With the recognized certificates (TGA, GMP, Halal & etc), of cause with great products and marketing plan, DXN is ranked 40th direct selling worldwide in "DSN Global 100", also it had enter 154 countries for now. With 'One Dragon' concept, DXN able to control the cost, and able to come out with affordable quality products.
The EPS ended Nov 2010 is RM0.174, with the price of RM1.31, the PE is ~7.5. The net profit CAGR is ~11%, up from 2006 RM21m up to 2010 RM39.5m. With my own understanding on this company, the global market is still booming, and initially i expect the EPS for 2011 to be ~RM0.20.
However with the weakening USD, and do take note that 90% of DXN business is coming from export. Thus i believe that the EPS might be impacted, and expected to hit RM0.16 per year. Thus with the PE of 10, and with the continuous strong growth of DXN, the target price for year 2011 will be ~RM1.60.
Also the ROE for this company is meeting my expectation, which is average ~15% for the past 5 years.
Hi Daniel,
ReplyDeleteYou like ROE very much. I have some useful tips to check earning quality. You can google them for more information.
Method to check the earning quality in annual reports are:
1) Using Accrual Ratio, high accrual ratio means lower earning quality
2) Big difference between growth rate - net income and cash from operations means low earning quality
3) Decrease in the ratio of 'cash from operation before interest and taxes' to operating income mean lower earning quality
Regards from SHinki