KUALA LUMPUR (Dec 19): RHB Investment Bank Research has maintained its ”buy” rating on Kotra Industries Bhd at RM4.67 with a revised target price of RM5.40 (from RM5.60), saying the company should be a major beneficiary of pent-up consumer demand for nutraceutical products amid the recent resurgence of Covid-19 cases.

In a note on Tuesday, the research house said Kotra’s over-the-counter (OTC) products (circa 60% of its topline) offer immunity benefits to consumers at different stages of life.

“The stock is trading at 10x FY24F P/E, in line with its historical mean.

“We trim our ESG score to 3.1 from 3.2, after revisiting the metrics for all three pillars,” it said.

RHB said the increase in health awareness among consumers in terms of boosting immunity against Covid-19 and other non-communicable diseases (NCD) should be a near-term re-rating catalyst that will propel the growth of the consumer healthcare product market.

“Our TP is based on 12x CY24F PE, or 0.8SD above its pre-pandemic 5-year historical mean of 11x, as the pick-up in consumer discretionary spending could boost the demand for neutraceutical products next year.

“Our TP incorporates a ESG premium of 2% as Kotra’s ESG score is a notch above the country median,” it said.