Hai-O 3Q net profit down 33.5% on lower sales, higher import cost

-A +A

KUALA LUMPUR (Mar 24): Traditional medicine company Hai-O Enterprise Bhd saw its net profit fall 33.5% to RM7.07 million for its third financial quarter ended Jan 31, 2015 (3QFY15), from RM10.63 million a year ago, mainly driven by lower revenue and higher import cost due to a weaker ringgit.

Earnings per share (EPS) fell to 3.73 sen, from 5.29 sen in 3QFY14.

In a filing with Bursa Malaysia today, Hai-O (fundamental: 3; valuation: 1.2) said revenue dropped 13.5% to RM61.96 million, from RM71.64 million in 3QFY14.

For the nine months period (9MFY15), the group’s net profit fell to RM20.7 million, from RM29.75 million a year ago; while revenue was 11.7% lower at RM169.47 million, from RM191.92 million in 9MFY14.

EPS for in 9MFY15 fell to 10.57 sen, from 15.10 sen in 9MFY14.

Moving forward, Hai-O said rising costs and weak domestic demand, coupled with the upcoming implementation of the Goods and Services Tax (GST) will pose a greater challenge to it.

The group also said the volatility of the ringgit against the US dollar will continue to have a negative impact on its cost of import purchases.

Nevertheless, it remains optimistic of the group’s businesses and is of the opinion it will continue to perform profitability in 4QFY15.

Hai-O’s share price closed up one sen or 0.43% to RM2.36 today, with a market capitalisation of RM458.44 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)