Power Root shares up on earnings recovery momentum

KUALA LUMPUR, Power Root Bhd shares notched up one sen to RM1.82 in the morning session after initiatives by its new management to rationalise and improve operations have shown positive results.

At 9.46 am, there were 101,900 shares traded.

Its warrants gained 2.5 sen to 72.5 sen with 54,000 units changed hands.

RHB Investment Bank Bhd has reiterated its buy call on the company and revised its target price to RM2.19 from RM2.06, a 21 per cent upside and five per cent yield.

New product launches, restructuring in the distribution network, and adoption of new technology should propel Financial Year (FY) 2019-2022 forecast earnings compound annual growth rate of 13 per cent.

We like the stock for its earnings recovery momentum, generous dividend payout, and sturdy balance sheet, it said in a note.

RHB noted that the research house is more reassured on Power Root’s prospects as earnings recovery momentum remains firmly on track.

Power Root has restructured some of its underperforming distribution networks and moderated advertising & promotion (A&P) spending to be more targeted, driven by return on investment.

Looking forward, Power Root is targeting 10 per cent topline growth in FY20, with both local and export sales expected to chip in.

This, should be driven by new product launches, and continued restructuring in distribution and dealer networks.

Source: BERNAMA (News Agency)