HAIO – Fundamental Analysis (11 Apr 2016)

Excel – Download Analysis File

Latest Financial – Q4 2016 Financial Report (29 Jun 2016)

FY16 Q4 Results Highlight:

  • HAIO recorded a 2016 revenue and core net profit of RM 298.1m (+24.3% yoy) and RM 36.4m (+ 22.2% yoy) respectively. This was mainly due to higher revenue generated by its MLM division, which was its main contributor (67% of revenue and 73% of operating profit).
  • HAIO’s FY16 turnover and PBT for its MLM segment increased by 46.5% yoy and 26.7% yoy to RM 135.6m and RM 28.8m respectively due to higher sales volume for most products, especially its “small ticket” items such as mineral coffee, bamboo salt, skin care and health supplements.
  • In addition, HAIO’s active measures to grow its distributor force has seen an increase of about 3,000-4,000 members/mth, which have further contributed to earnings.
  • The wholesale division however was weaker with a drop of revenue by 3.8% to RM 43.4m due to lower demand for Chinese medicine.
  • The retail division also posted a drop in revenue and PBT by 5.7% and 31.3% due to lower demand for high-end health supplements as well as poor response from the year end grand promotions for members.

Going Forward:

  • Next financial year will remain challenging in view of weakening domestic purchasing power and high costs of living, resulting consumers more cautious in spending.
  • Weakening of MYR against USD currency will increase the cost of import purchases.
  • In my opinion, fair value of HAIO is from 2.8 to 3.4 (Uncertainty Risk: from MEDIUM to HIGH) in 2 to 3 years. However, for longer term, I think its fair value could range from 4.3 to 4.7 (Uncertainty Risk: LOW)
  • I will continue to hold and accumulate HAIO as I believe that HAIO has the ability to overcome the challenges ahead.

At the time of writing, I owned shares of HAIO.

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