KUALA LUMPUR (Dec 21): Hai-O Enterprise Bhd's net profit for the second quarter ended Oct 31, 2016 (2QFY17) surged 78% to RM15.91 million or 8.22 sen per share versus RM8.94 million or 4.58 sen a year ago, underpinned by better performance from its multi-level marketing (MLM) division.

Quarterly revenue was up 36% to RM99.78 million against RM73.59 million a year earlier, also lifted by MLM division.

The Chinese, Western wines, herbs, and medicines wholesaler told the stock exchange its board has declared a five sen dividend for the quarter, with the dates of book closure and payment to be announced at a later date.

For the cumulative six months (1HFY17), its net profit was 67% higher at RM25.65 million or 13.26 sen per share versus RM15.38 million or 7.89 sen in 1HFY16, due primarily to its MLM business, which performed well during the period.

Cumulative revenue was up 38% at RM178.44 million compared to RM128.96 million a year ago.

According to Hai-O, the MLM division recorded a 63% year-on-year (y-o-y) rise in revenue to RM133.9 million from RM82.3 million, while pre-tax profit expanded 88% y-o-y to RM26 million from RM13.8 million.

"The increase was mainly attributable to higher recurring sale of the consumer products such as personal & household, beverage and healthcare products," it said.

"These small ticket consumer products contributed more than 70% to the total revenue for the division," it added.

Hai-O said new members recruited year to date had doubled to about 40,000, as compared to the previous year's corresponding period, which had contributed to higher sales in the division.

Going forward, the group viewed the rising cost of doing business and weak consumer sentiment, coupled with the depreciation of ringgit against major currencies, will continue to have a negative impact in the remaining half of the financial year.

Hence, it will relook its current strategies to mitigate that impact, especially for its wholesale and retail divisions, which are operating in "a very challenging environment".

"With the various measures taken by the group, the board of directors remains optimistic the group will continue to be profitable in the next quarter," it shared.

Hai-O shares gained 7 sen or about 2% to settle at RM3.77 today, for a market capitalisation of RM723.48 million.