DXN - Record Earnings, Quarterly Dividend Increases Further

DXN just released its 4QFY24 results.

Earnings:

Record quarterly earnings at RM79m (EPS 1.59sen)

-        Record full-year earnings at RM310.994m (EPS 6.28sen)

-        PE 10x based on closing price of 62sen

Dividend:

Quarterly dividend increases further to 1sen/quarter (FY24: 3.6sen or 5.8% yield)

-        Dividend policy: At least 50% of PATAMI

Net cash:

-        RM476.7m or 9.6sen/share (15.5% of market cap)

Cashflow:

-        Positive cashflow after capex, decent dividend payout, and paring down of debts (FY23, FY24)

ROE:

-        27.8% (FY24)

 

Growth:

-        Revenue has been growing at a double-digit rate since its privatisation in 2011.

-    The group is expanding its presence into Brazil. This market presents a significant opportunity with its large population of 217 million and its proximity to its existing Latin American presence.

 

More than 50% of DXN's sales are generated from Latin America. How did DXN, a Malaysian company, penetrate the Latin America market despite the vastly differences in language and culture?

Its “ONE WORLD ONE MARKET” concept differentiates itself from other MLM companies.

Unlike traditional geographical expansion, DXN doesn't directly set up branches in new markets and begin operations. Instead, they leverage their "ONE WORLD ONE MARKET" concept. Members introduce DXN products to new countries, sponsoring members from those regions. Members can operate in any country, allowing DXN to establish a network without significant upfront investment.

DXN only establishes a physical branch at an area after achieving a member base of 500 active members and hitting a minimum sales amount. This minimises risk and ensures efficient resource allocation. Notably, DXN boasts a perfect record of no branch closures since its inception.

The success story began with members from Malaysia, Indonesia, and the Philippines venturing into the US market. Spanish-speaking members in the US then brought DXN to Mexico in 2005. From there, it spread to Peru in 2010 and Bolivia in 2012. Currently, they're expanding into the vast Brazilian market. DXN's member-driven approach has resulted in a presence in 48 countries around the world.

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