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KUCHING: Hai-O Enterprise Bhd’s (Hai-O) multi-level-marketing (MLM) division will draw strength from the introduction of new fashion ranges as 70 per cent of their distributor base are made out of women.

Following a meeting between the Hai-O’s chief financial officer Hew Von Kin and the research arm of Kenanga Investment Bank Bhd ( Kenanga research), the research arm came away feeling optimistic of Hai-O’s prospects.

“Moving forward, the management is planning to introduce a range of fashion products, starting with ‘Hijab’ and ‘Baju Kurung’ categories in collaboration with Jimmy Choo and other well-known fashion designers.

“The management is confident that the fashion ranges will attract a huge demand from its MLM division as women make up 70 per cent of their total distributor base,” said the research arm.

Furthermore, Hai-O has also recently launched two new products in the second quarter of 2017 (2Q17) targeted towards its female dominated distributor base. The two new products are called ‘Shake Me and N’Licious’ and ‘Shake and Shape 30-Day weight loss challenge’.

In addition, the group also reported encouraging number of new recruitments which contributed to a total of circa 110,000 latest active distributors, representing an increase of 32.5 per cent in fiscal year 2016 (FY16) with an average age group of 30 to 45 years old.

These impressive numbers have certainty contributed to Hai- O’s soaring performance over the last few quarters, as witnessed by the group’s first half of 2017 (1H17) MLM division earnings before tax and interest (EBIT) surging by 91 per cent to RM25.5 million.

Kenanga Research noted that Hai-O’s management is confident that its momentum of distributor base expansion can be sustained with the younger generation of distributions coupled with the introduction of new lines and products.

Despite this confidence, Hai-O is still maintaing a conservative stance as both wholesale anfd retail segments within the MLM division are particularly vulnerable to weak consumer sentiment due to the seasonality factor of their products.

“The weakening of the ringgit further dampened business activities as most of the products in its wholesale division are imported. A 10 per cent depreciation in the local currency will drag down its net profit by RM2 to 3 million or 5 to 8 per cent of our FY17E net profit,” opined the research arm.

Additionally, Hai-O has also guided that it has taken up the Government’s initiative to capitalise on the renminbi clearing house as it allowed for direct transaction using renminbi.

This initiative has allowed Hai-O to bypass the use of the US dollar as the intermediary for foreign exchange transaction, reducing overall forex losses.