Thursday, March 24, 2011

Hai-O slides on weaker earnings

KUALA LUMPUR: HAI-O ENTERPRISE BHD [] shares fell in early trade on Thursday, March 24 after its earnings fell 65% to RM6.34 million for the third quarter ended Jan 31, 2011 from RM18 million a year ago as revenue shrank following lower sales from its multi-level marketing (MLM) division.

At 9.10am, Hai-O fell nine sen to RM2.18 with 115,600 shares traded.

Hai-O's revenue fell to RM57.60 million from RM131.28 million a year ago due mainly due the poorer performance of the MLM division, which is its principal subsidiary.

RHB Research in a note March 24 said it was cautious on Hai-O's MLM division as the effect of the internal restructuring for the division due to the ammendment in the Direct Selling Act (DSA) may continue to impact its membership recruitment drive and slow the growth momentum of its membership base.

'In view of the current skittish and volatile market environment, we believe investors are looking for more earnings stability and reliable returns, which Hai-O would not be able to offer at this juncture, in our opinion.

'We are thus ceasing coverage on the stock, with our last recommendation being an Underperform with an unchanged fair value of RM1.35,' it said.

No comments:

Post a Comment