KUALA LUMPUR: Hai-O Enterprise Bhd is maintaining its dividend payout policy of at least 50% of its net profit for the financial year ended April 30, 2009 (FY09), underpinned by strong growth in its topline.
Its group managing director Tan Kai Hee said the group would keep its promise to shareholders on dividend policy despite the challenging economic environment.
“To maintain our dividend payout policy is not easy at times like these. However, the current economic crisis has presented a unique opportunity for us, as more people, especially those without employment or wanting to have side income are turning to multi-level marketing (MLM), which in turn, gives us strong revenue,” he told The Edge Financial Daily in an interview.
Hai-O group chief financial officer Hew Von Kin said the group had achieved a double-digit topline growth for FY09 and was likely to at least maintain its dividend yield of 10%.
The group, which is announcing its fourth-quarter and full-year financial results this week, was also sitting on a healthy cash pile of about RM50 million currently, giving the group opportunities to look out for new business ventures, he said.
“Given that the entry cost for new ventures is now lower, it is a good opportunity to start looking around,” he said, adding that Hai-O preferred to look at new ventures related to its core businesses.
However, Hew did not disclose further information, and said plans were still sketchy at the moment but they would be announced in due course.
Hai-O is starting its multi-level marketing businesses in Indonesia next month, via its Jakarta-based 60% subsidiary PT Hai-O.
“We are targeting 5,000 new members for the first year of operations, which is a conservative number, based on the huge population of Jakarta,” Hew said, adding that the main products targeted at the Indonesian market would be its water filter system and lingerie.
Tan said given that the majority of Hai-O’s local distributors were Malays, with some having connections in Indonesia, the market would be easier to penetrate.
“Indonesia is a good starting point for us. If we are successful there, then we will start looking at establishing our presence in other countries regionally,” he said.
Tan said China would be the next market after Indonesia that Hai-O was eyeing, possibly within the next two to three years.
“We already have good businesses in Malaysia, but we know that we cannot contain our businesses locally only. We can say that we are now ready to prepare ourselves for regional expansion,” he said.
Tan said Hai-O might begin its expansion plans to China with retail outlets in certain parts of the country, but its products would be marketed via single-level marketing, as multi-level marketing activities were not allowed in the country.
He added that, nevertheless, opening retail outlets would enable Hai-O to market more Malaysian-made products into China. “We have the advantage of networks with Chinese businessmen and companies, and there is great potential collaborating with some of them.
“But, we want to be sure of gaining a foothold there first before we decide to venture into China fully. It will be a slow but steady process,” Tan said, adding that the group would still focus on its local businesses first.
Hew said Hai-O would spend between RM2 million and RM3 million this year to open up to five retail outlets in Malaysia.