KLANG: Beshom Holdings Bhd, which assumed the listing status of Hai-O Enterprise Bhd, plans to introduce new products to the market and recruit more multi-level marketing (MLM) distributors to boost sales.
About 70% of its revenue comes from the MLM segment, carried out by subsidiary Sahajidah Hai-O Marketing Sdn Bhd.
Interestingly, despite the traditional Chinese health wellness image carried by its products, over 90% of the MLM distributors are bumiputras, executive director and group chief financial officer Hew Von Kin told StarBiz.
Hew also said that over 70% of the company’s customers are bumiputras.
The traditional healthcare product manufacturer also sees more growth in its e-commerce sales, which have expanded amid the movement control orders.
Currently, e-commerce contributes about 15% to 20% of the total sales of the MLM segment.
Speaking during the launch of its new corporate image, group managing director Tan Keng Kang said the transfer of listing status from Hai-O to Beshom effective yesterday would separate the investment holding function and the operating business.
“The internal reorganisation is to streamline the various units and provide a clear demarcation
of business for the group’s segments, which will allow the management to have a more focused and targeted business and risk management initiatives for each segment.
“There is no change to our business activities encompassing MLM, wholesaling and retailing of herbal medicines, healthcare products, wellness and beauty products and also traditional Chinese medicine manufacturing services,” according to Tan.
The corporate exercise also involves a proposed share exchange of up to 300.29 million shares in Hai-O with new Beshom shares on a one-for-one basis.
With the completion of the exercise, Hai-O will focus on wholesale and retail. Beshom will concentrate on MLM, manufacturing, property holding and others.
Founded in 1975 by Tan’s father, Tan Kai Hee, who is the executive chairman, Hai-O is currently one of the country’s leading MLM business operators. As of yesterday, its market capitalisation stood at over RM552mil.
Tan told reporters that raw material prices have been increasing and this has posed a key challenge for the group.
“We have already increased the prices of our products in 2020 and this year. But it is worth noting that the raw material prices have increased for a few rounds,” he added.
Looking ahead, however, Hew said the group would try to maintain the current prices due to the weak economic conditions.
“When the right time comes, we will adjust the prices to balance out all stakeholders’ interest.
“We will try to control our other costs and maintain our margins. In fact, if you look at the latest results announcement, our profit margin is even higher than the last financial year,” he said.
For the first quarter ended July 31, the group’s gross profit margin improved to 42.3% from 36.6% in the previous corresponding period, thanks to a favourable change of sales mix and price adjustments on selected products for the wholesale division.
However, net profit fell by 31.8% year-on-year (y-o-y) to RM7mil in the first quarter, while revenue dropped by 31.03% y-o-y to RM49.14mil.
Moving forward, with the emergence of new Covid-19 variants, Hew said the overall economic and business outlook is highly uncertain. “But given Beshom’s foundations, we are quite confident that we will ride through the challenges,” he said.