KUCHING: Hai-O Enterprise Bhd’s (Hai-O) first quarter of 2018 (1Q18) net profit came within analysts’ expectation and has led to an upgrade in earnings forecasts.
Hai-O’s 1Q18 net profit of RM17.6 million was within the research arm of Kenanga Investment Bank Bhd’s (Kenanga Research) expectation at 23 per cent of full-year forecast.
No dividend was declared for the quarter as expected by Kenanga Research.
According to Kenanga Research, Hai-O’s multi-level marketing (MLM) continued its momentum, which was driven by expansion in distributor base, effective product strategy and reward incentive system as well as the recently launched fashion and beauty care range of products under the brand ‘Infinence’.
“On the other hand, its other operating divisions, including wholesale and retail divisions were still being affected by the weak consumer sentiment and unfavourable forex,” the research arm said.
“Moving forward, the group will continue to collaborate with a well-known local designer (currently, Rizman Ruzaini, supported by the expertise of Jimmy Choo) to roll out more fashion and beauty care range of products, while increasing its MLM contribution to suppress weakness in other segments.”
Post results, Kenanga Research upgraded its financial year 2018-2019 estimate (FY18E-FY19E) earnings by 11 per cent and three per cent, respectively, on higher contribution from the sales of the newly launched fashion and beauty care range of products as well as higher distributors base assumptions.
Kenanga Research thus maintained ‘market perform’ on Hai-O.