This article first appeared in The Edge Financial Daily, on October 16, 2015.
HAI-O ENTERPRISE BHD (-ve)
Hai-O (Fundamental: 3/3, Valuation: 1.8/3) was picked by our momentum algorithm for the first time yesterday. The thinly traded stock closed 0.4% higher at RM2.37.
Hai-O sells a wide range of Traditional Chinese Medicines (TCM) — it has exclusive rights to import over 200 TCM products from China — and healthcare products via multi-level marketing (MLM), wholesale and retail. MLM segment accounted for 56.5% of sales in FYApril2015.
For 1QFY2016, sales rose 11.2% y-o-y to RM55.4 million while net profit increased 6.5% to RM6.6 million, due mainly to higher contribution from MLM segment. It has a strong balance sheet with net cash of RM105.4 million or 54.2 sen per share.
Outlook for the local MLM industry is expected to be challenging, in view of rising cost of living and weaker consumer sentiment.
Dividends total 15 sen per share (including final dividend of 11 sen, ex-entitlement on Nov 11) for FY2015, giving a yield of 6.4%.