DOD: More to Come in Beauty Products and Network Marketing

We keep our BUY recommendation on DOD based on our target price of Bt10.70, implying an upside of 18% from the current price. We derive our target price from the 2021E PB/ROE of Thai Consumer Staples and apply a 15% small-cap discount.

Investment thesis:

• Network marketing creates a new sales channel with tremendous growth potential
• Recent acquisition expands cosmetics manufacturing capacity
• Significant R&D spending necessary to remain competitive

Interim: DOD continues to deliver strong results, and revenue was up 80% YoY. The results were in line with our expectations. The cosmetics segment’s revenue was lower than expected, but this was offset by better performance in food supplements.

Risks: Dependent on a few large clients and intense competition, lack of long-term contracts, inability to collect receivables, non-compliance with health standards, unable to find competent people to fill c-suite positions.