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Hai-O posts lower 4Q profit as GE14 uncertainties impact business
Jun 26, 2018
Source: The Edge
 

KUALA LUMPUR (June 26): Multi-level marketing (MLM) company Hai-O Enterprise Bhd's net profit fell 12% year-on-year in the fourth quarter ended April 30, 2018 (4QFY18) to RM16.27 million from RM18.46 million, on the back of lower revenue.

Quarterly revenue was down 7% y-o-y at RM110.65 million versus RM118.62 million previously, as its MLM division's contribution declined by some 17%, which was negatively impacted by the slow-down of business activities prior to the 14th general election, as members turned cautious due to uncertainties ahead of it.

Both its wholesale and retail division, however, recorded higher revenue contribution of about 35% and 46% respectively y-o-y.

The group's board proposed a final dividend of 11 sen per share for FY18, subject to shareholders' approval at its upcoming annual general meeting.

Meanwhile, notwithstanding the marginal 4Q earnings drop, Hai-O's net profit for the full FY18 grew 26% y-o-y to RM74.83 million from RM59.48 million, as revenue grew 14% y-o-y to RM461.78 from RM404.24 million.

The improved earnings was due to stronger topline contributions from all its three main business divisions, namely wholesale, MLM, and retail.

Moving forward, Hai-O said it will remain cautious and take proactive measures to mitigate the business risks surrounding its operating environment, arising from the uncertainties over the US-China trade war and the new government's policies that may affect local business sentiment.

"Besides, the concern over the interest rate hike in the US resulting the depreciation of the ringgit against USD will have negative impact to the group," it said.

Hai-O added that the MLM division will continue to carry out more new product development and plan to roll out a wider range of skin care and food supplements, in addition to the group’s effort to penetrate into fashion & lifestyle-related range of products. It said the division will also continue to widen its distributors’ base through the digital marketing platform.    

For the wholesale division, Hai-O is targeting to attract the younger generation to widen its customer base of its key product — Chinese medicated tonics, while continuing to secure more new overseas agencies to widen its product base.

"For the retail division, the collaboration with one of the well-known hypermarkets to open concession counters is in the pipeline. In addition, the division is working to develop more new house-brand products to widen its product portfolio and enhance margins," it added.

Hai-O's shares today closed up 1 sen or 0.21% to RM4.85 for a market capitalisation of RM1.41 billion.