KUALA LUMPUR (July 28): Shares in DKSH Holdings (Malaysia) Bhd rose 5.02% this morning after the stock was upgraded with potential benefits from its links to front runners in the development of a Covid-19 vaccine.

At 9.17am, DKSH had risen 14 sen to RM2.93, with 26,300 shares traded.

PublicInvest Research upgraded DKSH to “trading buy” at RM2.79, with a higher target price (TP) of RM3.80 from RM2.65, and said DKSH had garnered some trading interest recently, even surging 23% in a single day last Wednesday.

In a note today, the research house said this may well be linked to its long-term relationships with AstraZeneca and Pfizer, which are among the many front runners in the development of a Covid-19 vaccine, and the possibility of DKSH being a distribution arm should the vaccine of either one be commercially viable.

PublicInvest Research said with such a vaccine-related development (if any) still looking like a long shot at this juncture, it nevertheless sees a recovery in consumption spending in light of gradual improvement in economic activity following easing of the movement control order (MCO) and a cut in interest rates.

“We raise our earnings forecasts for FY20F (the financial year ending Dec 31, 2020) to FY22F by 4%-7% to account for the recovery in consumer consumption.

“We upgrade our call for DKSH from 'neutral' to 'trading buy', with the higher TP based on 11 times PER (price-earnings ratio), which is near its five-year historical average.

“We are also rolling forward our valuation to FY21F EPS (earnings per share). On a side note, DKSH has recently secured new partnerships with Kraft Heinz and Moccona,” it said.