Quick Facts
- DKSH has been providing market expansion services for over 125 years, primarily in Asian markets.
- The company was recently added to the OMSP1, replacing Komax.
Pros
- Continuous growth over many years ✔
- Further growth potential in Asian markets ✔
- Dividend yield of 3.55% ✔
Cons
- Integration risks from acquisitions ❌
- Low margins due to the business model ❌
- Significant impact of currency fluctuations ❌
Obermatt Ranks
 360° View | 73 |  | |
 Sentiment Rank | 52 | | |
 Value Rank | 50 | | |
 Growth Rank | 55 | | |
 Safety Rank | 79 |  | |
 Combined Rank | 77 | |
DKSH Holding AG, a company that offers market expansion services, was recently added to the OMSP1 index, replacing the previously held stock, Komax. The company assists firms in expanding into new markets, offering a comprehensive range of services from market research and analysis to sales and marketing, logistics, and customer service. DKSH operates in over 36 markets in Asia, Europe, North and South America, and employs around 30,000 worldwide.
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DKSH consistently manages to increase sales figures and revenues, achieving a significant rise in free cash flow to CHF 282.3 million in 2023. It also maintains a strong liquidity position with surplus cash. This capital management allows the company to capitalize on growth opportunities in Asia, where it continues to expand its market presence through strategic acquisitions and partnerships. Since 2019, 25 acquisitions have been made, not only diversifying the portfolio but also enhancing the potential for further profitable growth. These acquisitions have enabled enter into new market segments and deepened market penetration, allowing DKSH to optimally leverage rapid growth in Asian regions, which account for 93.9% of its net sales.
Despite strong increases in revenue and EBIT, DKSH has a low net profit margin in the low single digits, attributable to its business model based on high sales volume with low margins. Additionally, the high number of acquisitions brings potential risks, including integration challenges, cultural and operational adjustments, and the need to create efficient synergies between newly acquired companies and existing operations.
Another critical risk is the high proportion of business operations in the Asian market and the corresponding currency volatility. In 2023, the significant appreciation of the Swiss Franc led to a reduction in net sales by 7.5% and core EBIT by 9.2%. Such currency fluctuations can significantly impact financial results and increase financial risk for DKSH, operating in an already low-margin industry. In an environment where every percentage point of margin counts, such fluctuations require careful financial planning and management of currency risks to protect earnings power. Moreover, DKSH must continually innovate and adjust its business strategies to respond to changes in the fast-paced markets of Asia. Investment in technology and the digitization of processes are crucial to enhancing efficiency and reducing costs.