DKSH - no dividends for FY 2025?

As expected, DKSH privatization offer was rejected by minor shareholders. The share price reverses as some short-term investors might have sold their shares.

DKSH has made a handsome net profit in FY2025, and generated a positive Free Cash Flow as well. Unfortunately, DKSH has decided NOT to pay dividends for FY2025, as they will use the cash to settle the short-term debt and to confront with the possible business uncertainty due to Iran war.

Well, I am quite disappointed with the decision made by the Board. After all, a value investor like me depends on dividends to live right? Therefore, I have sold some of my shareholdings in this company and shift the monies to other companies that pay higher dividends.

Hopefully the Management would make good use of the cash preserved and grow the business further. 

YSPSAH vs DPHARMA, which pharma company is better?

When it comes to choosing a listed pharmaceutical company to invest in Malaysia, most peoples would go for DPHARMA, or PHARMANIAGA. These names are popular, as both companies are able to secure huge government contracts to supply generic drugs to government hospitals.

Almost nobody would even bother (or aware) about this small pharmaceutical company in Malaysia, i.e. YSPSAH, especially during the recent years where its reporting net profit plummets. 

In this blog, I wish to compare YSPSAH against its competitor DPHARMA in various financial metrics.

(1) Reported and Core Profits

As shown in figure below, the reported net profit of YSPSAH is very unstable lately, while the reported net profit of DPHARMA is uptrending. No wonder many investors out there would prefer to have DPHARMA in their portfolios.

Let us pause for a little moment and analyze why YSPSAH's earnings is so fluctuative. 

According to the Management, its 30% of revenue is derived from overseas, which is dominated in USD. So, its reported earning would be subjected to the currency rate fluctuation (e.g. USD vs MYR) inevitably, depending on the forex rate when the invoice is issued to the foreign customers and the forex rate at the account closing date. I noticed that YSPSAH has reported quite a substantial amount of "unrealized" forex loss lately as below. As seen, the unrealized forex loss is at record high in year 2025 at RM 15M due to the stronger MYR against USD. Here is the key, all this forex loss is unrealized, which is yet converted to MYR. According to the Management, YSPSAH practices natural hedging so far, where the received USD would be used to purchase raw material in USD.

When analyzing the real operating performance of a company, the use of reported net profit is quite misleading sometimes, especially for those companies that are export-oriented. Core profit would be more useful in this regard. To get the core profit, I have added the unrealized forex loss to the reported net profit (Note that for unrealized forex gain, I would deduct it from the reported net profit instead). 

Figure below shows the reported and core profits of YSPSAH. In 2024 and 2025, there is a divergence in the trends of reported and core profits. In general, the core profit of YSPSAH is at record high in year 2025. Although the core business of YSPSAH is still performing well, Mr. Market has sent the share price of YSPSAH to its multi-year low level in 2025 as YPSAH's reported profit attributed to shareholders plummets due to huge amount of unrealized forex losses. This indicates that Mr. Market would pay more emphasis to reported profit as compared to core profit. This has in turn created a good opportunity for serious value investors out there to buy a good company at low price.

Meanwhile, the core profit of DPHARMA is almost similar to its reported profit attributed to shareholders as DPHARMA's business is mainly in Malaysia. In general, the uptrending pattern DPHARMA's profit is more consistent than YSPSAH, possibly due to consistent award of government contracts. For YSPSAH, in FY2024, only 13% of revenue is derived from government contracts.

(2) Gross Profit Margin & Core Profit Margin

API is the main raw material used in pharma industry. Nowadays, most likely, a pharma company would procure API from China (previously from Ukraine). Let us look into how well these 2 companies managing their material costs. Figure below shows the gross profit margin of YSPSAH and DPHARMA. Since 2017, YSPSAH outperforms DPHARMA in terms of gross profit margin. In FY2025, YSPSAH gross profit is around 44%, while DPHARMA is around 39%.

On the core profit margin, again, YSPSAH has outperformed DPHARMA in the most recent 4 years (2022-2025). YSPSAH experienced a drop in core profit margin during Covid period, which could be due to lock-down in overseas market.

(3) Return of Equity (ROE)

The ROE of DPHARMA is generally higher than that of YSPSAH as shown below. 

Let us analyze the ROE further by using the DuPont formula that breaks down ROE into three key drivers: 

(a) Profit Margin (Profitability) = Profit/Revenue 

(b) Asset Turnover (Efficiency) = Revenue/Total Asset

(c) Financial Leveraging (Leverage) = Total Asset/Total Equity

Profit margin (a) has been analyzed earlier. The core profit margin of YSPSAH in FY 2025 is larger than that of DPHARMA, as shown in previous section.

For (b) Efficiency:

YSPSAH is seemingly more efficient than DPHARMA in terms of asset turnover. 

For (c) Leverage:

Apparently, DPHARMA's ROE is higher than YSPSAH's because the financial leveraging of DPHARMA is relatively high, which is around 200%. The leverage of YSPSAH in year 2025 is only around 130%.

Why DPHARMA's leveraging is so high? It is found that DPHARMA has been borrowing quite a substantial amount to boost up its sales and profit. Note that its gearing (= total borrowing/equity) is as high as 65% in FY 2025 (see below), and it is ~ 6x higher than that of YSPSAH's gearing (~11% in 2025). In other words, YSPSAH is quite prudent in bank borrowing, and it is relying mainly on improving (a) Profit Margin (Profitability) and (b) Asset Turnover (Efficiency) to improve its ROE.

(4) Return of Invested Capital (ROIC)

K.C. Chong, a renowned value investor in Malaysia, has been advocating the use of ROIC to gauge the quality of a company in generating profits by using the total invested capital (including the use of debts). ROIC can be calculated as: ROIC = Core Operating Profit/Invested Capital, where Invested Capital = Inventory + Receivable - Payable + Fixed Asset. Fixed Asset consists of Property, Plant and Equipment (PPE), rights-of-use assets, etc. You may find more explanation about ROIC from his book.

Clearly, while YSPSAH's ROE is lesser than DPARMA's ROE, the ROIC of YSPSAH is apparently higher than that of DPHARMA, which could indicate that YSPSAH is better in managing the invested capital to generate profit.

(5) Free Cash Flow (FCF)

For a value investor, the main intention to invest in a company is to get consistent (and hopefully growing) dividends from a company. When dividend is growing, the share price would follow (hence capital gain). A good company would pay dividends from the generated free cash flow (FCF), not from bank borrowings. Figure below shows the FCF per share for YSPSAH and DPHARMA. Undoubtedly, YSPSAH is superior to DPHARMA in this regard. That could be the reason YSPSAH is able to pay high dividends to shareholders every year. At the current share price (RM 2.08, date: 1 May 2026), the dividend yield is ~ 5.3%.

(6) Historical PER

Figure below shows the historical PER (= Core Profit/Earnings Per Share). In general, DPHARMA commands a higher PER most of the time as it is one of the market's favourite. Its PER shoots to almost 40x during Covid period, possibly due to the vaccine supply. After 2020, its PER seems to normalize to pre-Covid level. YSPSAH, on the other hand, is currently trading at single digit PER, as it was experiencing a heavy sell-off in FY 2024 and FY 2025 after its reported profit drops significantly due to huge amount of unrealized forex loss. The low trading liquidity of YSPSAH is another reason why it could not attract big funds at the moment, leading to low PER.

Conclusion

(1) Core profit: DPHARMA shows a more stable uptrend of core profit, as compared to YSPSAH. YSPSAH's reported profit is bumpy due to forex fluctuation (30% export); however, its core profit is uptrending in general.

(2) Gross & Core profit margins: YSPSAH profit margins are relatively higher than those of DPHARMA.

(3) Return of Equity (ROE): The Return of Equity (ROE) of DPHARMA is higher than that of YSPSAH. Based on the DuPont analysis, the higher ROE of DPHARMA is due to its high financial leveraging. In other words, DPHARMA relies mainly on debts (or borrowings) to drive the business. The above observation can be supported by its high gearing of 65% in FY2025 (vs 11% in FY2025 for YSPSAH).

(4) Return of Invested Capital (ROIC): YSPSAH is more efficient than DPHARMA in using the invested capital to generate profit. The ROIC of YSPSAH in FY2025 is 16% (vs. DPHARMA of 13%)

(5) Free Cash Flow (FCF) per share: YSPSAH is generating significantly higher FCF per share (RM 0.36) than DPHARMA (RM 0.08).

(6) Historical PER: Valuation wise, YSPSAH is cheaper undoubtedly. Market seems to abandon YSPSAH most of the time, especially during the period when MYR is strengthening against USD. This is the period where YSPSAH will report significant forex loss. The key is that this forex loss is "unrealized".

Based on the above, it would give a clearer picture to my family members in selecting which company to invest in pharma industry in Malaysia. In the recent Annual Report 2025 of YSPSAH, I notice that Mr. Kong Goon Khing has emerged as one of the top 30 shareholders (5th largest shareholder). A quick fact find from Google suggests that Mr. Kong has owned other companies such as AEONCR,  HUMECMT, MNRB, etc. From his shareholdings, I believe Mr. Kong is a value investor.

During the AGM held in 2025, Dr. Lee (MD of YSPSAH) has mentioned that the company is constructing a new sterile line and he has expected that this line can start to operate in 2026. A huge prepayment of RM 19M has been allocated for PPE, as outlined in the Annual Report 2025. 

Why 入魔容易入道难?

Today, I have dinner with my colleagues and we start talking about the effect of Israel-Iran war on the share market.

Colleague A is an engineer. His major asset is in EPF savings, and few properties and unit trusts. He mentioned that it is hard to make profit from share market as it is very uncertain (which I fully agree). So, his philosophy is: Using EPF to gain consistent 5-6% of dividends, and use a small amount of money in speculating in penny stocks, which might give him enormous gain in short term according to him. I asked him why speculating but not investing instead. He said EPF has done the investing part for him (and it generates consistent dividend so far). So, he would rather use some of his monies to 博一博 and buy in penny stocks, hoping to generate handsome return if somebody is willing to "goreng" the stock. He would look into the news, such as projects secured by the company that could trigger the share price to increase. He has got some shares of certain loss-making counters where he lost big, and still willing to hold them as he is too reluctant to realize the loss.

Colleague B likes dividend, claiming that only bank and REIT stocks are worth for investment in Malaysia. He prefers to invest in a local Chinese bank only, and he will keep on doing that when the price is right (not sure how he figures out the right price), as he claims that this bank is stable (which is true). And, he will not sell a single stock of this bank regardless of the stock price. His reasoning is that he might not able to buy the stock at low price again. I asked him why don't sell the stock when the company is overvalued and shift the money to more undervalued companies. He said he got no time to look into all the counters.

Colleague C is somewhat similar to Colleague A, focusing on EPF savings, but use some of his monies to invest in share market. He does not dare to invest big, but only use little monies to buy the stocks of some good companies. Most of these good companies are recommended by his friends, rather than picked by himself by doing thorough analysis.

Colleagues D and E are not interested on the share investment topic, and just listen to our stories. I aware that they invested in properties though.

The above investment stories of my colleagues could reflect the perceptions of general public on share market. Several categories have been identified based on my observation so far: 

Category 1: Somewhat "careful" speculator, who would use monies to 博一博. They don't dare to buy big (yet).

Category 2: Hardcore investor who strongly believe buy-and-hold strategy would work for a company in long term.

Category 3: Do not believe share market would bring wealth. So, properties are their first choice of investment.

I noticed that none of them practices value investing to full extent. No wonder Warren Buffet always said : "value investing is simple but not easy".

The difficult parts of value investing are:

• spending time in analyzing the financial reports of various companies;
• identifying good and undervalued companies out of the pool of listed companies; and
• allocating appropriate capitals to each company. 

Not many peoples are able to do all that, due to lack of time, interest, etc.

That could be the reason why speculators outnumber value investors by a huge margin. 

As the saying goes: 入魔容易入道难.

Being a true value investor (入道) is definitely a long and boring journey, as not many peoples are able to follow and stay consistent with it. Reasons? Too boring for them, and they might get sidetracked by speculators (魔) along the long journey. Being a 魔 can earn fast money, and it is simpler (according to them) to practice by looking into all those technical charts before buying/selling a stock.

So, should we become a 魔 ? or 半道半魔 ?

When I am about to be sidetracked by a 魔 (especially those semi-con/AI stocks that people are chasing them like crazy nowadays), I always recall the following ground (proven) truth:

Peoples that can survive in share market in the long run are value investors, not traders and speculators.

Focus Point - worth for investment?

 

I am myopic since 10 years old. Now am I am 45.

When I was 25 years old, my younger sister brought me to Focus Point in the Curve to buy a pair of branded glasses. I forgot the brand of the glasses already. But, I remember that the price of my glasses was around RM 800++. Pretty expensive for me. Since then, my first impression to Focus Point is --> high-class & expensive (not my taste). 

I never thought to buy the shares of Focus Point (FOCUSP) all this while, until I found out from HLIB's analyst report about this company. After doing some analysis on FOCUSP's financial report, I found that its revenue and net profit historical data are as below:

It is listed in the ACE market of KLSE in 2010. Since then, its net profit is down-trending from 2010 to 2018, although the revenue is growing. Interestingly, after 2018, both revenue and net profit have experienced a noticeable growth. Indeed, I am curious on why this could happen as optical industry is highly competitive. So, I dig into its Annual Report 2018 and found the following statements from the Chairman:

Thus, to bring focus back to our business, our fellow board members together with the management team and we have pushed through five main strategies so that we can have a more sustainable business:

 1. Upgrading our malls in areas where population growth is still prominent; 

2. Careful selection of our growth areas and launching our own e-commerce site; 

3.  Smarter procurement to match the changing lifestyle needs of our consumers; 

4.  Investing in human capital to support both our wholly owned and franchise business’; and  

5.  Aligning, and initiating cost management processes for managing and expanding the food and  beverage business.

If I understand correctly, the Management has been very selective in picking up locations for establishing new branches. Also, they would invest in upgrading the shops (in selected hot locations) to make them more appealing to potential customers. Cost management (smart procurement) is another way out, and the Management would find ways to expand the franchise and F&B business. 

Now, let us zoom into the CAGR of its business segments from 2018-2024. There are 3 business segments of FOCUSP, i.e. optical (main), F&B (Komugi) and franchise (mainly optical, I think).

One thing that has grasped my attention is its optical business. Although its revenue growth  is only 7%, its PBT growth is recorded at 24%!! This may indicate the cost management strategy implemented by the Management team is working well. The similar trend has been observed for its franchise segment. This is pretty amazing. Its F&B revenue experienced a double digit growth as well; however, this segment's profitability is hardly predictable. Sigh... bakery industry is high competitive.

I have also studied the number of optical retail outlets of Focus Point. Up to 2025, there are about 200 outlets in Malaysia. There are many types of optical retail outlets of Focus Point, targeting different market segments. Table below shows the number of outlets of the main types:

Can you see the pattern? Since 2018, the number of Concept Store has experienced a double digit growth, a whopping 23%!! As compared to other types of retail outlets, they are hardly growing in number. Management could believe that Concept Store could attract more sales as compared to other types of retail outlets, hence, they have been trying to grow the number of concept stores. I went into the Focus Point Concept Store in IPC yesterday (21 March 2026). Basically, all kinds of Focus Point optical products are housed in the Concept Store, ranging from the affordable (Whoosh) to luxurious (branded, e.g. BOSS, OAKLEY, etc.) one. I believe most customers would find it easier to find their desired glasses in the Concept Store. My daughter told me that the glasses there are trendier than other ordinary eyewear shops in United Point Kepong, as she finally found her preferred frame in the Focus Point Concept Store in IPC. She has her new Whoosh glasses readied in 30 minutes (Original Price: RM 288 Frame + Lens (UV & thin) + RM 100 (Blue-ray) = RM 388). As I am a MiCare member, I am entitled for another 10% discount (so I paid RM 349).

I have asked my daughter what's her experience when doing eye-power checking in the dark room. I did not manage to enter the room as I am filling out the optical form. She mentioned that the staff has performed a more thorough checking on her eyes as compared to the eyewear shop in United Point Kepong. The staff also check the focal points on her left and right eyes using a separate machine, before assembling the glasses. My wife did a free eye-check also on her eye pressure. I remembered that the CEO of FOCUSP once said he is offering differentiation in terms of service offered.

How about its Free Cash Flow (FCF)? One should note that a healthy company should pay dividends from FCF, not from bank borrowings. All this while, Focus Point is able to generate +FCF since 2014, which is commendable. More interestingly, its FCF generation capability is significantly stronger after FY2018. In FY2025, the total dividends given is RM0.0356/share * 616M shares = RM22M (only 30% of its FCF in FY2025 of ~ RM 74M). No wonder Focus Point has recently revised its dividend policy to become 50%.

Valuation

I have studied the PER of Focus Point during the years when its net profit is growing. Based on the median PER values of years 2020, 2021, 2022, 2024 and 2025, the median PER is ~11.2. So, the fair value would be around PER x Estimated EPS (=RM 0.0569) = RM 0.63.

During the time of writing (22 March 2026), the share price is RM 0.485. So, the Margin of Safety (MOS) is around (RM 0.63 - RM 0.485) / RM 0.485 ~ 30%. It is very attractive for me personally.

Strength of FOCUSP:

1. Largest eyewear retail chain, enjoying economies of scale.
2. Many shops are available (nearly 200 as in FY2024). Easier accessibility.
3. Differentiation in eye-checking services.
4. Aging population, rising myopic cases amongst children.
5. Working with Third Party Administrator (TPA) like MiCare & other corporate partners to boost up sales.
6. Offers advanced and comprehensive eye-screening procedures which are hardly found in other ordinary eyewear shops.

Risk:

1. Stiff competition by other players. Recently, A-look was acquired by EssilorLuxottica, the largest  eyewear company in the world. If A-look is expanded further, it could pose a risk to the growth of FOCUSP.
2. Dragged by F&B business which is very competitive.

Q4 2025 YSPSAH: A good quarter?

 

I am very lazy nowadays. Just have time to summarize the findings of YSPSAH recent quarter result. YSPSAH just reported its Q4 2025 earning as below:

As expected, due to the strengthening of MYR against USD, it booked another forex loss of RM 4M this quarter (vs. gain of RM 3 M Q4 2024). This reported figure is the combination of realized and unrealized forex loss. To know the exact numbers of each category, we have to refer to the upcoming annual report. No choice. However, according to my research (from FY2016 - FY2024), regardless of the fluctuation of USD against MYR, its realized forex gain/loss is only around RM 1M - 2M. I believe its natural hedging is properly implemented so far. Even during FY2024 (where USD weakens against MYR broadly), YSPSAH is still able to book in a realized forex gain of RM 1.6M (& unrealized loss of RM 9.2M).

For this Q42025, despite the forex loss, the net profit attributed to shareholders (accounting profit) stands at RM 7M, which is higher than the accounting profit reported in Q4 2024 (RM 6 M). On the whole year basis, however, the accounting profit for FY2025 is RM 25M, slightly lower than RM 27M made in FY2024. However, core profit (after adjusting forex loss, assuming the reported RM14M is unrealized forex loss) for FY 2025 is RM 39M (vs RM 35M in FY2024), which is commendable.

The operating cash flow (OCF) generated in FY 2025 is very strong, which is significantly higher than the accounting profit. Free cash flow in FY2025 comes at RM 54M-RM4M = RM 50M, which translate to FCF/share of RM0.35. It has ample cash to pay dividend from the internally generated cash flow obviously.

Concerning on its future expansion plan, I learn from the Management in AGM 2024 that they would build an advanced production line to boost up the capacity. They claimed that there is a problem in their old manufacturing line, leading to their inability to secure some local orders. As shown in the revenue breakdown below, local (and overall) sales experienced a slight drop indeed. This might indicate that the manufacturing plant could not take more capacity any longer, hence need further expansion.

From the cash flow statement (under Property, Plant and Equipment), I guess the number reported does not reflect the arrival of the new machinery yet. Still, the budget falls under capital commitment (Note A12 below). 

For valuation, core EPS comes at RM39M/142M shares = RM 0.27/share. Considering the closing price on 19/3/2026 (RM2.08), PER ~ 7.7. Personally, I found that it is very attractive. Plus, its dividend yield is > 5% with potential of further profit growth after the commissioning of the new production line.

Of course, Mr. Market would definitely abandon this counter as the USD is weakening nowadays (vs MYR). For a value investor like me, this would enable me to slowly accumulate the shares. Of course, this comes at certain opportunity cost. However, I am the kind of person that do not like to chase hot counter at high valuation. This kind of "boring" counter, instead, is my cup of tea.

The risk is rising energy cost (Iran war) and competition from bigger rival like DPHARMA in local market. It seems to me that DPHARMA is always the preferred supplier of government hospital. The Management told me that their competitiveness is their good service. Well, I am not sure how good service would translate to more sales lah... I am not familiar in pharma industry. Need more time to find out.

The truth of long term investing 长期投资 & the "mean reversion"

I believe most of us have heard about this: 

"To succeed in share investment, one MUST practice long-term investing, or 长期投资".

Sometimes, I wonder why those experienced investors always say the above. It seems to me that they like long-term investing SO..........MUCH. 

But, is it really the case?

I have a personal experience. I bought the shares of CCK in late 2023 at around RM 0.8x, the price shoots up to RM 1.4++ around mid of 2024, a hefty 80% gain in just a few months. I sell all my CCK shares as it is trading beyond the intrinsic value.

The above is one of my success stories, achieving 80% realized profit within 6 months.

However......

There are many instances in my investment journey whereby the bought companies have not reached their intrinsic values within the anticipated period of time. This is due to many factors: 

(a) Money does not flow into the sector of the bought company. For example, most monies flow into AI-related sectors in 2025, making those companies in other sectors under-performing although they are growing and financially sound.

(b) Near-term headwind on the industry. For example, export-based companies experience unrealized forex loss due to USD weakening against MYR, or facing business disruption in the Middle East during the Iran-Israel war in 2026, etc.

All these factors could be unprecedented, and out of our control in most cases. As investors, we have no choice but live with all these uncertainties.

In many cases, I bought the shares of those under-valued, fundamentally strong and growing companies at the time when their share price is up-trending (with the help of technical analysis), hoping their share price would revert to their mean (i.e. the so-called mean reversion process, which the legendary investor Ben Graham said that it would just happen magically). During this process, some headwinds would just appear and drag the entire mean reversion process. What would be a value investor do in this scenario? Well, if the headwind is not long-term, I believe most investors would choose to hold. There you go.... they have no choice but to go for long-term investment in this company.

For me, the strategy of  LONG-TERM investing is developed from the fact that in short-term, an under-valued, good company is very likely to face headwinds from time to time. If you are lucky (like my investment journey in CCK above), then you could make handsome profit in just a few months. But, in a real investment journey, sadly to say, we could not replicate this "luck" for every company that we bought. 

This is my message: We DO NOT like long-term investing. 

In fact, we are "forced" to do LONG-TERM investing to accommodate all the uncertainties during the mean reversion process, which could take years. After all, who do not wish their companies to get to their intrinsic values within a short period of time?

AJI-Q3 ending 31 Dec 2025 quarter result

 

AJI just released its Q3-2025 result as below:

By purely looking at the above result, the quarter net profit is not so good if compared to last year. What are the main reasons behind? Well, let us look into Note 11 below:

As expected, there is an unrealized forex loss of RM1.9M vs gain of RM 3.6M last year. It is due to the strengthening of MYR to other major currencies. If adding back the unrealized forex loss to the current quarter net profit, the core profit of the current quarter would be: RM 13234k+ RM 1938k = RM 15.2M (vs core profit of RM19348k - RM3624k = RM15.7M). So, the core business profit is almost flat.

Meanwhile, Management has guided that there is a marketing expense in Q3. Unfortunately, the exact amount is not disclosed. Similar question has been asked to the Management during AGM; however, no exact numbers coming from them... Not sure why it is so secretive.

Overall, the current Q3 result is not bad. If no marketing expenses, I guess the overall core profit would be higher than last year.

At the time of writing, Iran war is happening in the Middle east. I believe the freight cost to Jeddah (Saudi) would be higher, affecting the profit of AJI in near term. As a result, Market has realized this and sell the shares beforehand. I choose to hold, as the current share price is still below my calculated intrinsic value. 

Frankly speaking, I feel bit sad as all my paper profit evaporated due to the heavy selling. Who wouldn't, right? But, this would definitely happen to any serious investors in their long investment journey, I believe.

Hopefully the Iran-US-Israel conflict would be resolved soon.