Hai-O’s recovery on track, says JF Apex Research

Hai-O will also be intensifying efforts to recruit new members for its multi-level marketing (MLM) segment with another attractive campaign.

PETALING JAYA: Hai-O Enterprise Bhd is optimistic about its business outlook given the recent developments on the vaccine and ongoing implementation of the Prihatin stimulus packages to support businesses and households.

The company will also be intensifying efforts to recruit new members for its multi-level marketing (MLM) segment with another attractive campaign.

In a research note yesterday, JF Apex Research said the wellness and MLM company is further committed to its various strategies to help put Hai-O in a better position.

“Overall, Hai-O is committed to emphasis on several strategies for their business such as cost-optimism strategies, re-strategise business plans as well as work toward digital and e-commerce platforms.

“We believe the worst is over for Hai-O and the share price is well supported by its decent dividend yield of over 4% for FY22F, ” it said.

The group had declared a single-tier interim dividend of 4sen during 2QFY21.

JF Apex noted that the company’s 6MFY21 revenue and profit before tax increased 2.2% and 37.8% year-on-year (y-o-y) respectively given better sales in the MLM segment on the back of improved earnings from all segments.

The MLM segment rose 10.5% y-o-y thanks to its e-commerce and social media platforms. The success of its “Duit Raya” sales campaign coupled with its local incentive trip campaign and better sales from its newly launched lady wear product ranges also boosted sales.

Meanwhile, earnings in the wholesale segment were lifted by better cost optimisation strategies, higher margins for Chinese medicated tonic and premium cooking wine, as well as a one-off gain from the disposal of vintage tea amounting to RM800,000.

Moving forward, the group intends to continue its monthly flash sales to boost the MLM’s topline.

It will also extend its slimming lady wear series as well as repackage and reformulate several of its star products to widen and strengthen its product portfolio in tandem with current market trends.

As for wholesale and retail divisions, both segments will leverage on the upcoming Chinese New Year festive season through massive campaign activities and conventional channels as well as e-market platforms.

JF Apex maintained its “Hold” recommendation on Hai-O with an unchanged target price of RM2.30.

Risks to its recommendation include higher-than-expected operating expenses and lower-than-expected domestic spending due to higher cost of living.

Additionally, the Covid-19 pandemic could continue to weigh on the overall business group’s performance.