By YEOW POOI LING
PETALING JAYA: Hai-O Enterprise Bhd sees its multi-level marketing (MLM) division and pu-er tea continuing to drive sales, said group managing director Tan Kai Hee.
“We will enlarge the volume of our breadwinner products while increasing advertising and promotion activities as we want to widen our base to reach more Malay and English-speaking customers,” he told StarBiz.
The company, which is involved in the manufacture and wholesale of traditional herbal and pharmaceutical products, has allocated RM2mil to RM3mil for marketing.
Yesterday, in a filing to Bursa Malaysia, Hai-O reported historical highs in revenue and net profit for full year ended April 30 (FY07) at RM189.3mil and RM21.4mil respectively. Earnings per share improved to 32.61 sen from 16.39 sen in FY06.
The fourth quarter was the best performing quarter with revenue leaping 63% to RM56.7mil from RM34.9mil in the last corresponding period, while net profit was a whopping 197% jump to RM7.8mil from RM2.6mil before.
The sterling performance was due to the MLM division, more intensive sales promotions by the retail division for its royalty customer programme and additional sale of pu-er tea.
Revenue contribution from the MLM division grew 84% while the wholesale segment jumped 119% in FY07.
In addition, the company’s profit margins had improved, thanks to the ringgit appreciation, which lessened import costs and it saved RM1.5mil from a waiver of rental costs and reimbursement on certain expenses for leasing of a shopping complex.
Higher investment income also added to the profitability, Hai-O said.
In keeping to its promise to pay 50% of after-tax profit to shareholders, Hai-O has declared a final dividend of 13 sen per share, bringing the total dividend for FY07 to 18 sen a share.
“We’re proud to be able to sustain our growth since we’ve been around for 32 years now,” Tan said, adding that by carrying only premium products, it was able to fetch better margins.
The MLM model was also seen as sustainable as Hai-O had an average of 1,000 new recruits every month, he noted.
Hai-O has started opening retail outlets in high-traffic shopping malls, such as 1 Utama, Queensbay Mall (Penang) and Pearl Point (Old Klang Road), he said, adding that previously it was focused on shoplots.
Next year, another outlet is targeted to open in Mid Valley Megamall.
Meanwhile, Tan said the testing facilities housed under QIS Research Laboratory Sdn Bhd had been ISO 17025 accredited, which meant its test reports were accepted by manufacturers, third-party buyers and government authorities, hence ensuring Hai-O products were of high quality.