DKSH's Q1 net profit falls 9%

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KUALA LUMPUR (May 11): DKSH Holdings (M) Bhd’s net profit fell 9% to RM12.23 million for its first quarter ended March 31, 2015, from RM13.50 million in the previous corresponding quarter, bringing its earnings per share (EPS) to 7.75 sen against 8.56 sen.

However, its revenue for the quarter rose 10% to RM1.42 billion, from RM1.29 billion in the year before.

In its filing with Bursa Malaysia, DKSH (fundamental: 1.8; valuation: 1.8) attributed the lower quarterly profit to higher operating costs, as the group secured new clients in the consumer goods business unit.

“Compared to the first quarter of 2014, operating costs increased by 10.6%, which is largely in line with revenue growth and mainly due to increased rental costs for additional warehouse space for new consumer goods clients,” said DKSH.

Segmentally, its marketing and distribution segment posted lower contribution, due to lower margin sales mix and higher distribution costs.

On the other hand, its logistics segment saw stronger results as it secured more customers under its healthcare business, coupled with strong sales ahead of the goods and services tax (GST) implementation on April 1.

Going forward, the group maintains positive on its prospects for 2015.

“This is mainly due to new business development, resulting in various sizeable new clients which are supporting the underlying sales growth of the existing client base.

“The investments [that] the group has undertaken in distribution centres in 2014 and the move to the new offices mid-2015, are therefore important and timely to support this growth,” it said.

DKSH share price fell two sen or 0.38% to RM5.31 today, bringing its market capitalisation to RM840.32 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)