What do Nvidia (NVDA), ASML Holding (ASML), Shopify (SHOP) and SEA Ltd (SE) have in common? These were stocks that began with much scepticism and low valuation but would later surprise investors with their sudden boom. Their underlying fundamentals were grossly ignored or rather not well understood against the backdrop of changing demographics and geopolitics. At the point of its IPO in 2020, Airbnb’s stock was considered undervalued. Today it commands market strength through its solid fundamentals: long-term travel and housing trends still favour the business model.

Similarly, the once misunderstood models like Nvidia commands the generative AI chip market as ASML commands a monopoly of the EUV chip market today.

There is a saying in the Malay language to describe this state and context, “Juara dalam bayang”, which simply means the unrecognised potential.

As health and wellness awareness and consciousness continue to influence consumer choices, DXN Holdings Bhd (DXN), a homegrown brand of Malaysia, is making waves and emerging as a global leader by blending tradition with innovation. From its start-up beginnings in the state of Kedah in Malaysia, DXN has grown into a self-sustaining vertically integrated global enterprise with a presence in over 180 countries.

DXN manages its entire value chain — from cultivation and manufacturing to distribution — of a wide range of wellness products including dietary supplements, beverages, personal care, skincare, household items and water filtration systems.

Often overlooked and relegated as a multi-level marketing (MLM) business, this brand is redefining direct sales. It simply says it sells what it manufactures itself. DXN is not a “middle person”; rather, it offers more than the experience of employment. It offers the man of the street, you and I, the opportunity to be entrepreneurs. Dignity through work.

Making its debut in the inaugural Fortune Southeast Asia 500 list at number 491, coupled with strong growth momentum since its inception in 1995, DXN, which was re-listed on the Main Market of Bursa Malaysia in May 2023, delivered uninterrupted year-on-year growth and dividends in the financial year ended Feb 28, 2025 (FY25) with another record revenue of RM1.9 billion. For context, the company was previously listed in 2003 but was delisted in 2011 following a takeover and privatisation exercise by the founder and non-independent executive chairman Datuk Lim Siow Jin.

DXN declared total dividends of 3.7 sen per ordinary share for FY25, amounting to RM184.0 million, equivalent to 55.9% of net profit, reaffirming its commitment to delivering shareholder value in line with its dividend policy of distributing at least 50% of net profit.

DXN’s culture is rooted in sincerity, honesty and trust — values embedded in its name, which is derived from the ancient Chinese word daxen. DXN was established by Lim to modernise traditional natural remedies for contemporary lifestyles. Atypical of founder entrepreneurs, Lim has relinquished the day-to-day operations of the company to his diverse and global board and sound management team.

Central to this purpose is ganoderma, or lingzhi — the “King of Herbs” — long revered in Chinese medicine for its powerful health benefits.

Some of its well-known products include Lingzhi Coffee 3-in-1, Lingzhi Black Coffee, DXN Spirulina, DXN Ganocelium and DXN Reishi Gano, all of which are distributed through its unique direct-selling model.

“One Dragon, One World, One Market, One Mind” encapsulates the DXN business model.

Vertically integrated and self-sustaining business model geared towards physical, mental and environmental health.

“Our purpose is our brand. It reflects our role as a globally integrated nutraceutical wellness leader.

“We operate a one-stop centre designed to meet diverse health and wellness needs under one roof.

“Our entire business is grounded in responsible practices — from how we select, manufacture and package our products to how we bring them to market — which has earned the trust of major customers and is key to sustaining the DXN brand,” says DXN CEO Prajith Pavithran.

“Trust underscores our brand longevity and sustainability. Without trust there is no DXN,” he added.

Malaysia stands as one of the leading powerhouses in the Direct Selling (DS) Landscape. Malaysia was the world’s sixth largest from 2020 to 2024, placing it among the top direct selling markets globally. Ranked fourth largest within the Asia-Pacific region, Malaysia’s global market penetration is at 2.8%, which is high, indicating the Malaysian government’s favourable policies have enabled a safe, reliable, secure and well-governed direct sales environment. Malaysia is comparable to the US, South Korea, Germany, China, and Japan in the ease of doing direct sales business and high penetrability.

“Malaysia is one of the world’s strongest direct selling markets — ranked sixth globally by market size and first in market penetration — reflecting strong consumer engagement with the model. Key to direct sales are reliability and governance, and DXN has successfully leveraged them as a foundation for its global expansion. The high market penetration in Malaysia shows how a large portion of the population is involved in or regularly purchases from direct selling channels,” says DXN chief operating officer Mahmood Hisham.

Against this backdrop, DXN has evolved as one of the key and leading players in direct sales. The company has built a global community of over 19 million registered members, a reflection of the strong appeal of its health products and direct selling business model. As of Feb 28, 2025, about 3.6 million members are active, regularly using the products, distributing them and running their own businesses under the DXN brand.

“Direct selling gives people the chance to start their own business. With low initial investment, it offers the flexibility to balance work and personal life. It also provides a way to earn extra or even full-time income, thus improving financial stability and independence.

“More than that, it supports personal and professional growth through training, leadership development and community building. The business also changes our own lifestyles. We become advocates of good health,” says Mahmood.

With rising demand for customised healthcare needs and solutions, DXN’s business is built to withstand volatile geopolitics and demographic evolution. DXN plans to launch more than 80 new products over the next two years to complement its existing portfolio of 562 stock-keeping units (SKUs). The company is also increasing investment in research and development to introduce science-backed wellness products tailored to changing consumer needs.

“Innovation is key. We’re not just expanding our range for numbers — we’re investing in quality and efficacy to ensure our products meet the highest standards. We also focus on optimising our global logistics and distribution network to improve efficiency and delivery times,” says Prajith.

DXN currently operates 14 manufacturing plants and seven cultivation facilities across Malaysia, China, India, Indonesia, the UAE, and Mexico, producing ganoderma, spirulina and various other herbs and ingredients used in its finished capsules, tablets and powdered and liquid beverages. Prajith says new production sites are underway in Morocco, Peru and Kelantan in Malaysia.

To reach a wider audience and improve customer engagement, DXN is expanding its operations, especially in emerging markets such as Brazil, Argentina and Egypt. These efforts are also aimed at building a broader base of consumers and distributors.

Built to withstand crisis and volatility

The global direct sales market is expected to grow to around US$208.46 billion in 2025, at a Compound Annual Growth Rate (CAGR) of 7.0% from 2024. Other estimates for “direct selling establishments” suggest growth to US$260.93 billion in 2025 at a CAGR of 5%.

“Our FY2025 performance was impacted by the strengthening ringgit. However, DXN’s resilient risk management team and Board Risk Committee proactively track all potential exposures that could affect our business,” says CEO Prajit Pavithran. “This culture of discipline — encompassing both financial and risk management — is embedded throughout the organisation, which is vital in today’s volatile environment.

To reinforce investor confidence, we are enhancing our quarterly disclosures to offer greater transparency on cost drivers and one-off expenses. We are also engaging stakeholders directly to clarify issues and address concerns.”

An internal review is currently underway to improve cost efficiency across all operations. While near-term margin pressures persist, DXN is underpinned by strong cash flow, minimal debt, and a robust vertically integrated model — enabling us to sustain a 55.9% dividend payout and support long-term growth.”

DXN is located in high-growth consumer markets. Many of these countries are under penetrated in wellness, giving DXN room to scale. In FY2025, Latin America contributed the largest share of revenue at 57.9%, followed by Asia (25.8%), the Middle East and Africa (9.4%), Europe (5.2%), North America (1.5%) and Oceania (0.2%).

“While maintaining a generous dividend payout, we reinvest a portion of our profits into areas that drive long-term growth by expanding production facilities to meet increasing global demand, such as the facilities in China, India, Mexico and, most recently, Bangladesh and Nepal; investing in research and development to innovate new products and improve existing formulations; and expanding into new markets and territories,” adds Mahmood.

At a time when many global businesses are shying away from their sustainability commitments and human rights transparency, DXN offers itself to lead in human rights-based business practices.

At the foundation of its product line is ganoderma, cultivated on farms that follow Good Agricultural Practices (GAP) and are certified under ISO 14001 environmental management standards. This means DXN avoids harmful chemicals and prioritises long-term ecological health in its farming practices.

“We are proud to be the first Malaysian wellness company to adopt a human rights-based business model through vertical integration and technology. Our implementation in Malaysia, China and India will be showcased at the upcoming Geneva ESG forum in November 2025,” says Prajith.

DXN’s commitment to sustainability extends beyond its own operations. The company was selected by Bank Negara Malaysia to be part of its Greening Value Chain (GVC) Catalogue, recognising DXN as the Malaysian MNC leading by example in building greener supply chains. Bank Negara Malaysia highlights how companies can contribute to national sustainability goals, with DXN featured as a key contributor on how global operations can reduce environmental impact.

“We transform lives and improve livelihoods from poverty to sustainable income and dignity through work,” adds Prajith.

Nvidia, ASML, Shopify, Sea Ltd, Airbnb and MonsterKey are some of the once-ignored and overlooked stocks that are misunderstood as they serve niche markets, thus lacking analyst coverage. These companies buck the trend and succeed due to macro trend alignment, leadership agility, strategic partnerships and technological leverage. The business case of these companies is based on needs of the future developed today.

The key for investors and analysts is to look beyond the current narrative and watch the catalysts and the trends — tomorrow’s story told today. Leadership agility and strong boards play a key catalyst. ASML, once undervalued, became an enabler in the EUV industry. Regional firms can offer high returns despite lack of global attention.

In an ecosystem where personalised wellness and healthcare awareness are rising, DXN could just be the next Nvidia in the direct sales market, potentially a game changer for how direct sales is viewed by investors and analysts. It tells tomorrow’s story today in wellness.

DXN has all the fundamentals that investors call on for sustainable investment: Consistently profitable with strong earnings and revenue growth, with expanding margins. Generates significant free cash flow, which supports share buybacks and long-term investments. Low debt that maintains a relatively lean balance sheet, giving it flexibility in a downturn and tailwinds. A business model with predictable revenues supports sustainable dividend payouts even during market downturns which DXN has proven to offer.

Predicated on a sustainable supply chain model and on lowering carbon footprint through its strategic expansion, DXN offers access into more regions, making the business less susceptible to external volatilities of market forces, thus making the business crisis prepared and sustainable. The diverse and strong board and management, as well as workforce, make it a company to bet on. DXN is probably telling us tomorrow’s trends today: Champion in the shadows.