InNature Bhd receives a HOLD recommendation from analysts at Maybank Investment Bank Bhd (Maybank IB), with an unchanged target price of RM0.23. Maybank IB reiterated that while the company continues to show strong environmental efforts, its earnings outlook remains tepid, with no clear catalysts for growth in the near term. Maybank IB's earnings estimates and valuation for FY25 remain unchanged, based on a price-to-earnings ratio (PER) of 16x. InNature's updated environmental, social, and governance (ESG) score stands at 63 out of 100, slightly lower than the previous score of 64, according to Maybank IB's proprietary ESG scoring methodology.

InNature, a beauty retailer, continues to make progress in minimising its environmental impact through policies focused on product recycling, reusability, and energy consumption. The company reported lower greenhouse gas (GHG) emissions and water consumption on a year-on-year basis for FY23. Additionally, it expanded its scope 3 emissions coverage to include employee commuting and business travel, compared to FY22 when it only tracked emissions from internal logistics. These efforts reflect InNature's commitment to reducing its carbon footprint, despite the relatively low level of emissions associated with its operations.

However, the marginal decline in InNature's overall ESG score is attributed to weaker performance in the social and governance aspects. Women's participation in management roles decreased to 50%, a significant drop from 83% in the previous review. Furthermore, the company saw an increase in CEO, Managing Director, and Board of Directors' remuneration as a percentage of net profit, which raised concerns over governance. These factors contributed to the lower scores in the 'S' and 'G' categories.

Looking ahead, the research house remain cautious about InNature's earnings potential for the third quarter of 2024, citing the absence of significant festive demand as a factor that may continue to dampen performance. However, the rise in inbound international tourism could help mitigate the effects of weakened domestic spending. Additionally, the sharp recovery of the Malaysian Ringgit (MYRGBP: +8.2% in 3Q24) is expected to support margins in the coming quarters.

InNature, which retails and distributes The Body Shop and Natura products across Malaysia, Vietnam, and Cambodia, remains a key player in the beauty retail sector. The company's market capitalisation currently stands at RM158.8 million, with a 52-week high and low of RM0.26 and RM0.23, respectively. Its major shareholders include Etheco Sdn. Bhd., holding 51% of the company, while Bluplanet Sdn. Bhd. and Eastspring Investments Bhd. hold 13.6% and 4.4%, respectively.