‘Power Root’s encouraging growth momentum will keep going’

KUCHING: Power Root Bhd’s (Power Root) encouraging growth momentum will sustain going forward, analysts opine, taking into account the fundamental improvement in its marketing and distribution strength, effects of price increases and rising contribution from new products.

According to RHB Investment Bank Bhd (RHB Investment Bank), the strong US dollar will also bode well for the group’s earnings as a net exporter.

“We believe the price hikes on a relatively more aggressive manner by its major competitors have placed Power Root in a strategic position to capture the consumer downtrading under an inflationary environment, considering the widening price gaps,” RHB Investment Bank said.

“In addition, such dynamic renders it more room for cost pass through, if necessary.”

Meanwhile, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) expected solid topline coming from the domestic market boosted by further price increases ahead.

Despite several price hikes, Kenanga Research noted that Power Root’s coffee prices are still lower than that of its competitors thanks to its diversified sourcing, notably Vietnam and India (apart from the usual Brazil and Colombia) which mitigates the effect of high prices globally.

“Costs are also well contained; thanks locked in inputs prices that extend well into March 2023,” the research arm said.

“We like Power Root on account of the robust domestic and Middle East markets, its ability to pass on rising costs to consumers backed by resilient demand and it being shielded from volatility in input costs via forward buying.

“However, we see slowing demand post World Cup 2022 and inflationary pressure.”