PublicInvest: Fiamma’s product range to sustain sales growth

The growth is underpinned by population growth, higher disposable income and an increase in urbanisation


PUBLIC Investment Bank Bhd (PublicInvest) expects the trading and services segment of Fiamma Holding Bhd will continue to post steady 5% earnings growth in the financial year 2022 (FY22) to FY24.

Its analyst Denny Oh stated that the growth is underpinned by population growth, higher disposable income and an increase in urbanisation which will lead to the growing demand for lifestyle products produced by companies like Fiamma.

“We are conservatively looking at 5% growth in FY22-FY24. The outlook for the property development and investment segments of the company have improved, though management’s immediate effort is to clear its inventory levels, which is likely to gain traction in the coming quarters,” Oh stated in a report on Fiamma today.

He added that the company continues to strengthen and expand its distribution network in Malaysia for its various brands and products including expanding its online presence to reach a wider retail customer base to remain competitive.

“The group’s core competencies lie in its successful brand building, established distribution network and wide range of products.

“Through its core competencies, the group’s trading segment has delivered steady earnings growth with a higher operating margin over the years compared to its peers,” the analyst stated.

During the Covid-19 pandemic, Fiamma registered a strong FY21 performance on the back of increased demand for electrical household products as the group’s brands has attained maturity of brand awareness and its wide range of products that meet current market demand.

Its product team constantly reviews and assesses its portfolio of brands and products to ensure it is relevant to current market conditions, the analyst added.

The investment bank has initiated coverage on Fiamma with an ‘Outperform’ call with a target price of RM1.22. Fiamma was last traded at 96 sen a share today.

“We like Fiamma for its experienced product team, established distribution network, and portfolio of brands and products,” Oh noted.