KUALA LUMPUR: Synergy House Bhd is expected to record strong financial year 2024 (FY24) to FY26 earnings growth, supported by the exponential expansion of the business-to-consumer (B2C) division and a resilient business-to business (B2B) segment.
Rakuten Research said that as part of its growth strategy, Synergy aims to strengthen its B2C segment, which enjoys better margins.
"For FY23, this segment made up 55 per cent of revenue, up from 25.6 per cent in FY22. By FY24, it plans to expand its B2C offering to over 2000 SKUs," it said.
Meanwhile, Rakuten said Synergy will enter the French market, replicating its successful UK model. With operations in five markets and 11 platforms, including Wayfair US, it targets a 70 per cent B2C revenue share by FY25.
Prioritising expansion into top global importers, Synergy will onboard more than four new platforms in 2024, such as Amazon Germany, Canada, France, and Mano-Mano France.
"As such, we forecast a strong FY24 to FY26 earnings growth averaging around 30 per cent, supported by the exponential expansion of the B2C division and a resilient B2B segment.
"Furthermore, Synergy House maintains a solid balance sheet, with a gearing ratio of 0.6 times as of the fourth quarter (Q4) FY23," it said.
In addition, Rakuten said Synergy emphasizes leveraging technology and artificial intelligence (AI) to acquire up-to-date information and enhance efficiency in expanding the B2C sales segment.
In line with its continuous upgrades in AI, the firm said this enables the company to streamline operations and achieve significant milestones.
"Serving both B2B and B2C channels, Synergy reaches customers through online retailers, chain stores, wholesalers, and third-party e-commerce platforms.
"Buy with a target price of RM1.05 based on the FY24 price earning forecast of 15 times, in line with industry peers," it added.