KUALA LUMPUR: Hai-O Enterprise Bhd sees 20% growth in revenue for the year ending March 31, 2009 (FY09), driven by the multi-level marketing (MLM) division, said managing director Tan Kai Hee.
“In the current (slowing) economy, more bumiputras will go into direct sales and coupled with support from the Government, the division will continue to flourish,” he told StarBiz yesterday.
The healthcare company expects an average of 2,000 new distributors joining its MLM force each month. Currently it has about 70,000 distributors, of whom about 20% to 30% are active.
Moreover, it intends to add a new line of skincare and cosmetics to its current product range.
“About 80% of the distributors are women. We believe the new product offerings will gain very good response from them,” Tan added.
Hai-O reported a record high net profit of RM48.5mil for FY08, up a whopping 127% against RM21.4mil in FY07.
Revenue surged 97% to RM373.8mil from RM189.3mil. Earnings per share more than doubled to 64.38 sen against 32.61 sen before.
Based on yesterday’s closing price of RM3.84, this translates into a price-to-earnings of close to six times.
Tan said the MLM segment contributed 75% and 70% of Hai-O’s revenue and profits respectively. The wholesale retail and manufacturing division also did better than before.
The growth in MLM was attributed to strategic product offering, strong and aggressive marketing plan and attractive incentive trips.
Tan said its water treatment system, Bio-Aura and female beauty line comprised more than half the sales contributed by the MLM division.
“We sold about 70,000 units of the second generation Bio Aura, which was launched early 2007,” he said.
The retail division, on the other hand, focused on house brands that provided better profit margins, Tan said, adding that the ringgit's appreciation also reduced import cost, resulting in operating margin rising to 18% from 16% previously.
Hai-O’s balance sheet ballooned, raising overall cash and investment position to over RM80mil or RM1 per share.
In line with its 50% profit payout as dividend policy, it has declared a final dividend of 32 sen per share. Together with the interim dividend of 8 sen, total dividend amounted to 40 sen for FY08, which gives a yield of 10.4%.