KUALA LUMPUR (May 15): Consumer products distributor Amway (Malaysia) Holdings Bhd (Amway) reported a 40.1% on-year hike in its net profit to RM36.7 million in its first quarter ended March 31, 2015 (1QFY15), from RM25.5 million previously, due to higher sales before the implementation of the goods and services tax (GST).

Its 1QFY15 revenue was up 50.1% on-year to RM321.9 million, from RM213.3 million; while earnings per share (EPS) improved to 22.41 sen, compared to 15.49 sen in 1QFY14, its filing to Bursa Malaysia showed today.

In tandem with its improved financials, the group declared a first interim single-tier dividend of 10 sen per share for the financial year ending Dec 31, 2015, which will be paid to shareholders on June 17.

Amway (fundamental: 2.5; valuation: 1.5) said the revenue increase was due to pre-GST buys and well-received promotions focusing on high value items.

“The record sales registered in the first quarter was primarily due to the strong pre-GST buy up. The implementation of GST will likely have an adverse impact on our business owners (Amway distributors)’ purchases in the subsequent quarters,” it said.

Hence, it expects the remainder of 2015 to be “extremely challenging” due to both the strength of the US dollar on its import costs, and the expected period of adjustment in market demand post-GST.

Amway said it would focus on supporting its business owners to grow their businesses, through various sales and marketing initiatives.

Amway closed up 6 sen at RM10.80 today, which gave it a market capitalisation of RM1.78 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)