HAI-O ENTERPRISE BERHAD

(Post date : 29 August 2010)

Hai-O Enterprise Berhad is a Malaysia-based company. Established in 1975, Hai-O has since become a famous household name offering a wide range of Chinese medicines, medicated tonic, wellness, beauty and healthcare products. Providing superior quality healthcare products at a reasonable price is our business policy.

Hai-O was listed on the Second Board of Bursa Malaysia Securities Berhad in 1996, being the first traditional healthcare company on the Bursa stock exchange. The Company had then successfully transferred to the Main Board of Bursa Malaysia on 8 October 2007.

The principal business of the Company involves wholesaling, retailing, multi-level marketing, pharmaceutical factory and modern Chinese Medicinal Clinics. The business segments of the Company include wholesale, multi level marketing, retail, manufacturing and others. The wholesale segment includes wholesaling and trading in herbal medicines and healthcare products, herbs and tea.

The multi level marketing segment includes operating multi level direct marketing of healthcare and beauty products. The retail segment includes retail chain stores. The manufacturing segment includes manufacturing, producing and distributing pharmaceutical products, alcoholic and non-alcoholic drinks.

Peking Tongrentang (M) Sdn Bhd, a joint venture company (the JV Company) between Beijing Tongrentang and Hai-O started its business in Kuala Lumpur since 2002 and has achieved remarkable performance for offering quality services and high quality herbal medicines to the public.

Facts & Figures

Refer to the chart above, Hai-O stock price during March 2009 was RM1.33 and the stock uptrend rally continue until March 2010 at the price of RM4.92. Since March 2010 highest point, stock has heading downward and become sluggish. Recently in August, the stock closed at the price of RM3.22 which is below 38.2% retracement level (RM3.55).

The stock is heading towards 50% retracement level at about RM3.12 soon? Or stock will rebound back and go upward? According to technical analysis, the chart currently show NO obvious SIGN of BULLISH, so it will most probably reach the 50% retracement level in near term. 50% retracement level is also a support line where there was a resistance line in November 2009 that change itself to current support line. As most of us are aware that the market outlook for coming quarters are not positive enough, stock market will be easily affected by the market investors’ emotions.

So, with the weak performance prospect for the MLM market in coming quarters and lack of interest from the investors in coming quarters, the stock has the high possibility to going further down. It is possible to reach 61.8% retracement level at the price ar RM2.70 in the next two coming quarters, or it might dropped even more than that? Stock has in strong rally since last year March and it is the stock market to take a REAL BREAK? Will it be subjected to a long bearish trend or just a short one? How much more will the stock price drop? From chart, it is very much possible to reach the 50% retracement level soon. And to reach the 61.8% retracement level at RM2.70, most probably before the next two quarters.

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RESEARCH HOUSE ALWAYS TOO OPTIMISTIC ABOUT THE COMPANY PERFORMANCE? IF NOT WHO IS GOING TO KEEP ON BUYING THE STOCKS?

March 22, 2010

HAIO - Price Target News

Stock Name: HAIO
Company Name: HAI-O ENTERPRISE BHD
Research House: RHB

KUALA LUMPUR: RHB Research has reduced its fair value (FV) of Hai-O to RM5.20 from RM5.30 after its earnings adjustment.

It said on Monday, March 22 the revised fair value was based on an unchanged 11.5 times CY10 EPS, a 20% discount to its consumer division PE of 14.5 times.

"Together with attractive net dividend yield of 4%-6% per annum, we maintain our Outperform recommendation for the stock," it said.

RHB Research said Hai-O's 9MFY04/10 core net profit of RM56.0 million (+52.7% YoY) was in line with its and consensus expectations, accounting for 71% of full year net profit forecasts respectively.

"We believe this to be in line as 4Q is generally the strongest quarter for the group, accounting for 30-36% of historical full year forecasts," it said.

AFTER VIEWING THE FINANCIAL REPORT, DO YOU THINK THIS FINANCIAL FIGURE CAN BE ACHIEVED?

Hai-O targets RM40m in monthly sales by end-2010

by botzone » Thu Dec 24, 2009 7:26 am
Dated: 24.12.2009
Source: Business Times

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MULTI-LEVEL marketing firm Hai-O Marketing Sdn Bhd aims to sell 30,000 units of various products worth RM40 million monthly before the end of next year. Hai-O Enterprise Bhd (7668) managing director Tan Kai Hee said the company presently sold about 20,000 units of various products worth RM30 million monthly. Speaking in Kuala Lumpur yesterday, he was confident that sales would continue to increase because the products were good of quality and offered many benefits to users.

Hai-O Marketing, a Hai-O Enterprise subsidiary, distributes about 100 products. Tan said the products marketed were made in Malaysia using technology from overseas including Korea, China and Japan. "Our product prices are considered moderate and reasonable, that's why they are saleable and well accepted by users," he said. He said the company that had been in operation since 17 years ago, presently had 100,000 distributors nationwide and aimed to enlist 4,000 new distributors monthly. "We now have 300 millionaire entrepreneurs whose title is Crown Diamond Manager (CDM) and more than 50 stockists throughout Malaysia," he said.

Tan said the company had begun to explore the Indonesian market and would hold an official launch in April next year. In guiding its entrepreneurs, he said, the company also provided assistance in terms of marketing plan, product sale and incentive. Meanwhile, MyJ Konsortium Sdn Bhd, a company that runs an MLM business marketing Hai-O Marketing products, aims to record monthly sales of RM10 million next year. Its managing director, Datuk Suhaili Yosop, said 50 Malay millionaire entrepreneurs with the CDM title would be produced next year. Currently, there were 20, he added.

He said the target would surely be achieved through a marketing system called the "MyJ Project" that was being implemented. He said the vast marketing space for Hai-O products in Malaysia should be fully utilised by young entrepreneurs. – Bernama

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Friday, July 30, 2010

HAIO Membership in Hai-O to contract in FY2011
Stock Name: HAIO
Company Name: HAI-O ENTERPRISE BHD
Research House: RHB

Hai-O Enterprise Bhd
(July 29, RM3.66)
Downgrade to underperform (from market perform) at RM3.70 with reduced fair value of RM3.63 (from RM4.06): We believe that due to the revised Direct Selling Act (DSA), Hai-O's membership drive will be affected, as well as its retention of existing members.

We have adjusted our forecast to include a net membership contraction of 1,200 per month, which consequently reduces our FY2011 ending April 30, 2011, to FY2013 core distribution force (CDF) assumption by 5.1% to 10%.

One of the reasons for contraction is that the revised DSA has tightened the regulations in the MLM industry to stop MLM members from front-loading stocks, as this could subsequently lead to its members not being able to sell the excess shares.

It also deters MLM leaders or members who were previously front-loading to continue their recruitment activities as they are now unable to make quick profits as they did previously.

While the more stringent ruling will lead to a temporary slowdown in recruitment, we believe that it could also lead to negative growth of MLM members, given that some of the members who were previously making quick profits may drop out of the company.

We are thus cutting our revenue per member growth assumption to negative 10% (from negative 5% previously), for FY2011 because we believe that member productivity will decline as they are no longer able to front-load their stocks. For FY2012 to FY2013, however, we are maintaining our revenue/member growth at 1% for each year.

Although the MLM division outlook is bleak, the negative impact is cushioned somewhat by the fact that all the other divisions are on track, especially its energy division, which has drawn interest from various parties with regard to its heat transference technology.

Private placement is still a no-go and the recently announced cancellation of its proposed private placement is positive news in our view.

The private placement would have diluted earnings-per-share (EPS) by 6.9% and reduced FY2011 projected dividends to 15.6 sen, from 17.1 sen currently.

The risks to the stock include termination of supply agreements from its suppliers in China, stronger-than-expected strengthening of the US dollar; and weaker-than-expected increase in consumer spending.

We are reducing our FY2011 to FY2013 earnings forecast by 8% to 11.8% after incorporating the contraction in membership numbers and a reduction in revenue/member as previously highlighted.

The temporary setback to the MLM business will affect earnings significantly in the near term. However, we believe that Hai-O will be able to pull through and come back stronger in the longer term, with members of higher quality and productivity.

Nonetheless, we are downgrading our call to underperform, as we have reduced fair value to RM3.63 from RM4.06, based on unchanged 10 times CY2011 EPS. ' RHB Research Institute, July 29


This article appeared in The Edge Financial Daily, July 30, 2010.