HAI-O SELL TARGET PRICE 1.61 by OSK....very drastic downgrade

SELL 
Target RM1.61
Previous RM3.57
Price RM3.26
CONSUMER (RETAIL)
Hai-O is involved in wholesaling, retailing,
multi-level marketing and pharmaceuticals,
and also operates modern Chinese
medicinal clinics.
Stock Statistics
Bloomberg Ticker HAIO MK
Share Capital (m) 202.2
Market Cap (RMm) 659.1
52 week H│L Price (RM) 4.93 2.40
3mth Avg Vol (‘000) 635.2
YTD Returns -7.6
Beta (x) 0.72
Major Shareholders (%)
Tan Kai Hee 9.61
Akintan SB 7.17
Excellent communication 5.13
Share Performance (%)
Month Absolute Relative
1m 0.9 1.0
3m -11.7 -22.7
6m -26.2 -32.9
12m 46.4 6.7
6-month Share Price Performance
2.30
2.80
3.30
3.80
4.30
4.80
Apr-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10
Hai-O’s 1QFY11 were below our and consensus estimates, with revenue and net
profit diving 63.1% and 57.7% y-o-y respectively. The poor results were mainly
attributed to its MLM division, which reported a sales contraction of 73% amid slower
membership growth. This is, however, partially offset by the sales improvement at
other divisions. Despite the weak results, EBIT margin improved by 2%-pts on higher
operating efficiency, sales of higher margin products, and the weakening of USD
against RM, which has reduced importat costs. Given that the results were
substantially below our expectation, we cut our FY11/12 earnings forecast by 52%-
55%. Our TP is hence reduced to RM1.61. Downgrade to SELL. full report please get it from OSK