This article first appeared in The Edge Financial Daily on September 21, 2017
KUALA LUMPUR: Hai-O Enterprise Bhd announced a 83.35% growth in its net profit for its first quarter ended July 31, 2017 (1QFY18), from RM9.74 million to RM17.87 million, thanks to higher sales of its products and additional sales from newly recruited members.
Quarterly revenue came in 58.32% higher at RM124.54 million, compared with RM78.66 million for the corresponding quarter in the preceding year, mainly attributable to higher contribution from its multilevel marketing (MLM) and retail divisions.
Hai-O, in its filing with Bursa Malaysia yesterday, said for the quarter under review, there was a one-off recognition of the employees’ share option scheme of RM2.6 million factored in.
Overall, net margin improved by 2.1% as a result of higher sales of its premium products and improvement in operational efficiency.
For its MLM division, the group said revenue increased by 81.4% year-on-year (y-o-y), mainly attributable to big-ticket items such as fashion and garment due to intensive sales campaign carried out during the quarter. Total sales volume for the division was also boosted by recurring sales from its consumer products and the newly launched hijab fashion wear.
Its retail division showed y-o-y revenue growth of 14%, despite a challenging operating environment.
Meanwhile, the company’s wholesale and other divisions contributed lower revenue compared with the corresponding quarter last year, by 8% and 3.8% respectively.
Moving forward, Hai-O remains optimistic that the group will remain profitable in the next quarter, and has ongoing activities planned to keep sales momentum going for its MLM division. However, the company expects its wholesale and retail divisions to be affected by weak domestic demand as consumers are cautious in spending.
Hai-O’s share price has rallied almost 78% year to date. It settled three sen or 0.64% higher at its intraday peak of RM4.70 yesterday, giving it a market capitalisation of RM1.41 billion.