KUALA LUMPUR (Dec 18): Hai-O Enterprise Bhd’s net profit grew 41.5% year-on-year to RM10.35 million in the second quarter ended Oct 31, 2020 (2QFY21) from RM7.32 million last year, thanks to higher sales from its multi-level marketing (MLM) division.

This is despite a slight 3.3% decline in revenue to RM66.14 million from RM68.39 million, its stock exchange filing with Bursa Malaysia today showed.

The group also declared a higher interim dividend of four sen per share, which will be paid at a date to be announced.

During the quarter, Hai-O said its MLM division saw stronger sales of consumer products which was boosted by higher rebates and discounts given during flash sales campaigns for food and beverages as well as its personal care and skin care products. The launch of its new lady wear items also boosted sales during the quarter, said Hai-O.

As for its wholesale division, higher profits was also recorded despite lower revenue, thanks to effective cost optimization and a one-off gain from the disposal of vintage tea amounting to RM800,000.

For the first six months of FY21 ended Oct 31, Hai-O's net profit rose 36.9% to RM20.62 million from RM15.06 million last year, while revenue rose 2.2% to RM137.38 million from RM134.45 million.

The group's net operating profit margin improved to 19.8% during the period, from last year's 14.7%, mainly due to effective cost optimisation initiatives and a favourable change of sales mix, said Hai-O. This is on top of the one-off gain from the sale of vintage tea mentioned earlier.

Going forward, the board expects the group to remain profitable despite its anticipation of a challenging business environment in the next quarter, as it steps up member recruitment while continuing with its monthly flash sales campaign to boost revenue.

This is on top of the extensive Chinese New Year promotion campaign it intends to launch for both its wholesale and retail divisions as the lunar festive season approaches, it added.

Shares of Hai-O closed one sen or 0.43% higher at RM2.32 today, valuing it at RM696.69 million. Year to date, the stock has climbed 14.3% from RM2.03.