not vested
Stock pick: Hai-O Enterprise Bhd
Share price: RM5.09
Hai-O Enterprise Bhd remains a relatively undervalued wellness and multi-level marketing (MLM) company, despite its share price having almost doubled over the last one year.
The counter is our top pick for this year. We ascribe a target price of RM6.41 based on 17.5 times the company’s estimated earnings for the financial year (FY) ending April 30, 2019.
We expect Hai-O’s earnings to grow 51% year-on-year (yoy) in FY2018 and 23% yoy in FY2019. In FY2017, the group saw its earnings grow 63% yoy.
As at end-October last year, the group had cash and cash equivalents totalling RM93.75mil against short-term borrowings of only RM1.19mil.
Hai-O’s net profit overtook that of its peer, Amway (Malaysia) Holdings Bhd, for the first time in history last year despite its revenue being half of the latter’s (Hai-O’s RM59.3mil for FY2017 versus Amway’s RM54.6mil for the financial year ended Dec 31, 2016).
Currently, Hai-O is trading at 14 times forward price-earnings compared to Amway’s 19 times.
Source: LEE CHUNG CHENG, JF Apex Securities