Consumer sentiment improved in November, it says
PETALING JAYA: Hai-O Enterprise Bhd says consumer sentiment improved in November, thanks to lower petrol prices.
“October was our weakest month in the second quarter but sales showed improvement last month as the Government started to reduce petrol prices and consumers geared up for the festive season,” financial controller Hew Von Kin told StarBiz.
The company, which provides Chinese healthcare products, has been benefiting from the growth of its multi-level marketing (MLM) division.
Hew said MLM customers were mainly civil servants, who enjoyed fixed income and therefore unaffected in terms of spending.
Besides, its products are not premium-based, hence there will still be demand as consumers shift to mid-range products from high-end ones.
“We expect the wholesale and retail divisions to weaken after Chinese New Year while the MLM division is likely to stay resilient as people seek part-time jobs to supplement their income,” he said, adding that new MLM memberships would offset the slower spending next year.
Hai-O launched a series of healthcare supplement products last weekend, which have received positive response so far.
“We plan to launch a range of skincare products in the first quarter of next year. We have already secured the approvals and are currently working on the packaging and design,” Hew said.
Last week, Hai-O reported a stronger net profit of RM10.9mil for the second quarter ended Oct 31, or almost 20% higher than the previous corresponding period of RM9.1mil.
Revenue jumped to RM87.3mil from RM80.5mil a year ago, thanks to higher contribution from the wholesale and MLM divisions. For the first half year, net profit was RM24.5mil on revenue of RM200.2mil.
On a quarterly basis, second-quarter net profit was lower by 20% from the first quarter’s net earnings of RM13.6mil.
In the filing to Bursa Malaysia, the company said the weaker quarter-on-quarter results were due to smaller contribution from MLM.
However, the retail business achieved better sales in the second quarter from the first, thanks to members’ sales promotions and higher margins from its house brand products.
Hai-O’s internal growth target for the financial year ending April 30, 2009 was to achieve 5% in sales, it said.
OSK Investment Bank, in a report, said next quarter’s performance would stay strong driven by the retail division, which would benefit from the Chinese New Year celebrations next month.
“Hai-O’s attractive incentives will continue to drive the expansion of its MLM network and help the group to expand into new markets, like Indonesia, which will kick-start in March,” OSK said.
Hai-O is cash-rich with a war chest of almost RM48mil and generates good dividend yield of about 13%.
