Haio- the new King of MLM?

Haio has just announced a fantastic set of results for QE31/7/2009. Its net profit increased by 26% q-o-q or 36% y-o-y to RM18.5 million while turnover increased by 12% q-o-q or 32% y-o-y to RM149 million.


Table 1: Haio's 8 quarterly results

Haio's steady growth in both the top-line & bottom-line is clearly shown in the chart below. We can see that its turnover for QE31/7/2009 surpasses the previous high recorded in QE30/4/2008. Nevertheless, the record high net profit for QE30/4/2008 remained intact.


Chart 1: Haio's 18 quarterly results

Haio's latest results compared very favorably to the other two major listed MLM companies, Amway & Zhulian. In term of valuation, Haio has the lowest PE but Zhulian trades at a lower Price to Book. Over the last 4 quarters, Amway's pre-tax profit dropped from RM41.3 million in QE30/9/2008 to RM22.2 million in QE30/6/2009 while Zhulian's pre-tax profit also dropped from RM30.7 million in QE31/8/2008 to RM19.7 million in QE30/5/2009. Haio has seen its pre-tax profit increased from RM15.3 million in QE31/10/2008 to RM26.3 million in QE31/7/2009.


Table 2: Haio, Amway & Zhulian's latest quarterly results compared

Haio (traded at RM5.94 as at 11.00 am) is now trading at a PE of 8.7 times (based on last 4 quarters' EPS of 68 sen). For a well-managed company with a steady growth track record, Haio's valuation is undemanding. (Note: Haio's PE in Table 2 is based on the annualized EPS of 22.2 sen from the last quarterly results.)

Chartwise, Haio is in a long-term uptrend. Its upside seems to be capped by the line connecting its peaks. This "resistance" may again act to cap its current strong rally at about RM7.00-7.50.


Chart 2: Haio's weekly chart as at Sept 29, 2009 (Source: Quickcharts)

Based on improved financial performance & relatively attractive valuation, Haio remained a good stock for long-term investing.