KUALA LUMPUR: Multi-level marketing firm Hai-O Enterprise Bhd said a shift in its sales strategy to focus on smaller and less pricey consumer items is helping the company attract the younger crowd.
This is fuelling its double-digit revenue growth.
“Our shift in strategy has attracted more young entrepreneurs to sign up as distributors in the MLM division,” group managing director Tan Keng Kang said.
“At present we have 80,000 distributors and the numbers are still growing everyday,” Tan told reporters after Hai-O’s 41st AGM yesterday.
Tan noted that in efforts to drive higher sales volume in the MLM segment, it had ploughed in RM10mil in capital expenditure to upgrade its e-commerce platform and set up more distribution centres nationwide.
“We will open more distribution centres to improve efficiency of resources and support the increasing sales volume to ensure business sustainability.
“We have also plans in the pipeline to expand Hai-O’s market share in the virtual market,” he said, adding Hai-O’s undertakings in the e-commerce activities were still in the preliminary stages.
Hai-O’s net profit for the first quarter ended July 31, 2016 rose 46.9% to RM9.74mil or 5.03 sen per share, from RM6.63mil or 3.39 sen per share, a year earlier, mainly contributed by its MLM and wholesale divisions.
Revenue was up 42% to RM78.66mil from RM55.38mil.
In the meantime, Tan expects Hai-O’s retail and wholesale segments to be impacted by the soft consumer sentiment amid the weak economy and uncertainties around the region.
But we hope to mitigate this by managing cost overheads and improving ties with business associates to expand product offerings,” he noted.
On its plans in China and Indonesia, Tan said the company did not intend to shift its distribution business from the countries, although the operating conditions were tough.
“It is rather challenging doing business in Indonesia and China due to the stringent regulations there, but we are not moving away because opportunities are still huge in these markets,” he said, adding that it would focus on growing its distributions in South-East Asia.
Hai-O intends to grow its market capitalisation to RM1bil in the next three years, and hoped to maintain its 50% dividend policy.
Hai-O shares closed unchanged at RM3.45 yesterday with a market value of RM662mil.