KUALA LUMPUR (July 28): PublicInvest Research has upgraded DKSH Holdings (M) Bhd to “Trading Buy” at RM2.79 with a higher target price (TP) of RM3.80 (from RM2.65) and said DKSH has garnered some recent trading interest, even surging 23% in a single day (July 22).

In a note today, the research house said this may well be linked to its long-term relationship with AstraZeneca and Pfizer, one of the many frontrunners in the development of a Covid-19 vaccine, and the possibilities of it being a distribution arm should either one be commercially viable.

PublicInvest said with this vaccine-related development (if any) still very much a long-shot at this juncture, it nevertheless sees recoveries in consumption spending in light of the gradual improvement in economic activity following the easing of the Movement Control Order, and the cut in interest rates.

“We raise our earnings forecast of FY20F-FY22F by 4%-7% to account for recoveries in consumer consumption.

“We upgrade our call on DKSH from Neutral to Trading Buy, with a higher TP of RM3.80 (RM2.65 previously) based on 11x PER, which is near its 5-year historical average.

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